Can redemption option innovation alleviate the constraints of risk perception on demand willingness for housing reverse mortgages in China?

Based on cumulative prospect theory, this study constructs a demand decision-making model for elderly participation in housing reverse mortgages (HRMs), aiming to examine whether the innovation of the introduction of redemption options can alleviate the constraining effect of risk perception on demand willingness for HRMs in China. The findings are as follows. (1) The elderly exhibit a strong perception of risk in the HRM market, and the cumulative prospect value of participating in HRMs is lower than the expected housing value, resulting in subjective resistance to HRMs. (2) Chinese residents are deeply influenced by the traditional concept of "raising children for old age," and housing assets account for a high proportion of household assets, leading to a strong preference for housing bequests. Therefore, bequest motives constitute an important constraining factor on demand willingness for HRMs in China. (3) The model innovation of embedding redemption options, through the flexible design of retaining part of the inheritance value, can reduce the volatility of perceived inheritance loss among the elderly. This approach alleviates, to a certain extent, the inhibitory effects of risk perception and bequest motives on the demand willingness for HRMs, thereby providing an innovative pathway to enhance the social acceptance and market sustainability of HRMs.