Health insurance coverage remains critically low in developing economies, with Nigeria's National Health Insurance Scheme covering only 5% of the population. Understanding consumer demand patterns is essential for designing effective insurance policies, yet limited research has applied behavioral economic frameworks to health insurance decision-making in developing contexts. This mixed-methods study investigated factors influencing health insurance demand in Nigeria using behavioral economic principles, examining the effects of market structure (open vs. closed economy), demographic characteristics, and price sensitivity patterns on insurance purchasing decisions. Study 1 employed a hypothetical purchase task with 76 Nigerian participants randomly assigned to open or closed economy conditions, measuring willingness to purchase health insurance at 15 price points (₦5 - ₦560,000). Exponential demand curves were fitted using a modified exponential demand model to assess demand intensity (Q₀) and price sensitivity (α). Study 2 involved focus group discussions with 5 participants who completed the purchase task, exploring decision-making processes through thematic analysis. The exponential demand model demonstrated strong predictive validity (median R^2 = 0.87, IQR = 0.81 - 0.92) across demographic subgroups. Contrary to theoretical expectations, no significant differences emerged between open and closed economy conditions (p > 0.05). Age, income, gender, and current insurance status were significantly associated with demand parameters. Younger participants showed higher demand intensity but greater price sensitivity, while low-income participants demonstrated higher demand intensity (Q₀ = 91.37) than high-income participants (Q₀ = 74.29). Qualitative findings revealed "reverse price sensitivity," where participants rejected very low-priced options due to quality concerns, and identified a potential pricing corridor of ₦3,000 - ₦17,500 ($2 - $12 USD) balancing affordability with quality signaling. Behavioral economic models may effectively characterize health insurance demand patterns in Nigeria, revealing complex price-quality relationships that challenge traditional economic assumptions. The null finding for market structure effects suggests that existing healthcare alternatives and institutional distrust may override theoretical market distinctions. Results support targeted subsidies for younger and lower-income populations and highlight the importance of pricing strategies that signal quality while maintaining affordability.

The authors have declared no competing interest.

This study did not receive any funding.

I confirm all relevant ethical guidelines have been followed, and any necessary IRB and/or ethics committee approvals have been obtained.

Yes

The details of the IRB/oversight body that provided approval or exemption for the research described are given below:

The Institutional Review Board (IRB) of Southern Illinois University gave ethical approval for this work.

I confirm that all necessary patient/participant consent has been obtained and the appropriate institutional forms have been archived, and that any patient/participant/sample identifiers included were not known to anyone (e.g., hospital staff, patients or participants themselves) outside the research group so cannot be used to identify individuals.

Yes

I understand that all clinical trials and any other prospective interventional studies must be registered with an ICMJE-approved registry, such as ClinicalTrials.gov. I confirm that any such study reported in the manuscript has been registered and the trial registration ID is provided (note: if posting a prospective study registered retrospectively, please provide a statement in the trial ID field explaining why the study was not registered in advance).

Yes

I have followed all appropriate research reporting guidelines, such as any relevant EQUATOR Network research reporting checklist(s) and other pertinent material, if applicable.

Yes

All data produced in the present study are available upon reasonable request to the authors