Today's insurance and nancial markets are characterized by and ever increasing
complexity and product choice. How do we assist individual household consumers
in making informed choices about their nancial positions in these markets? This
thesis consists of ve separate research papers that are all in some way concerned
with the design and regulation of nancial contracts in relation to consumer preferences
under uncertainty. First, the design of mortgage products in relation to
consumer preferences in a market with a stochastic interest rate is examined. We
derive the (extreme) characteristics of an investor who optimally chooses either a
xed rate mortgage or an adjustable rate mortgage. We also show how adjustable
rate mortgages by construction have a build-in cap on the adjustable rate in contrast
to what could be perceived from standard nancial advice. Next, optimal
investments of an investor with time-inconsistent preferences in a Black-Scholes
market is explored. We derive the optimal investment strategy of an investor with
a scaled mean-variance objective and derive an approximation to the optimal investment
strategy of an investor who continuously measures utility with respects
to an updated wealth-dependent reference point. Finally, the implications of a
ban on risk-classication in an insurance market with a low-risk and high-risk
customer groups with homogeneous utility preferences is examined and discussed.
We illustrate how solidarity in premiums between the low- and a high-risk group of
insurance customers may lower the premiums of the high-risk customers without
aecting the premium level of the low-risk customers when a solvency capital requirement
is imposed. The papers highlight how the risk preferences of individual
consumers relate to the design of nancial contracts and the regulation thereof.
It is our intention that the insights gained in the thesis contributes to a better
understanding of the complex nancial decisions faced by individual consumers
today.