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Contract Design and Insurance Demand
Last registered on August 30, 2019


Trial Information
General Information
Contract Design and Insurance Demand
Initial registration date
August 28, 2019
Last updated
August 30, 2019 10:01 AM EDT

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Primary Investigator
University of Maryland
Other Primary Investigator(s)
Additional Trial Information
On going
Start date
End date
Secondary IDs
This paper uses data from a randomized experiment with around 1700 households in rural China to study the effect on insurance take-up of offering a menu of insurance contracts rather than a single one. Surprisingly, I find that offering more choices increases the take-up rate of the basic contract (lowest premium and payout) by 30%, while only a small proportion of farmers choose contracts with higher premiums and payouts. Information inference explanation is ruled out by the fact that the effect holds even when all farmers are aware of the existence of all contracts. A policy implication is that strategically offering a menu of contracts can be an easy and cheap way to improve insurance take-up.
External Link(s)
Registration Citation
Cai, Jing. 2019. "Contract Design and Insurance Demand." AEA RCT Registry. August 30. https://doi.org/10.1257/rct.4641-1.0.
Experimental Details
Intervention Start Date
Intervention End Date
Primary Outcomes
Primary Outcomes (end points)
Insurance take-up
Primary Outcomes (explanation)
Secondary Outcomes
Secondary Outcomes (end points)
Secondary Outcomes (explanation)
Experimental Design
Experimental Design
I use a two-year randomized experiment to identify the role of contract design in influencing insurance demand. The experimental site includes 38 randomly selected villages in Jiangxi Province with around 1800 households. The first year experiment was carried out in Spring 2010, including 13 villages with around 560 households. The main intervention is to randomize the menu of insurance contracts offered to farmers. The first year data is used to test the impact of offering different menus of contracts on insurance take-up. The second year experiment was implemented in Spring 2011, with a different set of 25 villages (around 1200 households), in order to identify two different mechanisms of the contract effect: a context effect and an information effect. The second year design includes a 4 by 2 randomizations to identify different mechanisms of the contract effect. First, I randomize four types of contract menus on the household level. In those menus, contracts differ in the level of insurance premium, government subsidy, and maximum payouts. The second randomization is an information treatment. Within each of the four contract groups, half of the households were provided with two additional pieces of information, including the existence of other contracts and the real probability of disasters.
Experimental Design Details
Not available
Randomization Method
randomization done in office by a computer
Randomization Unit
Was the treatment clustered?
Experiment Characteristics
Sample size: planned number of clusters
38 villages
Sample size: planned number of observations
2000 households
Sample size (or number of clusters) by treatment arms
500 control, 1500 treated
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
IRB Name
Insurance Take-up and the Impact of Insurance Provision on Agricultural Outcomes
IRB Approval Date
IRB Approval Number