DYNAMIC ENDOGENOUS RISKS & NON-EXPECTED UTILITY BEHAVIOR
0
조회
0
다운로드
0
인용
0
참고문헌
키워드
초록
The theory of endogenous risk captures the idea that people self-protect and self-insure to reduce risks to human and environmental health. Herein we extend the standard static model to include the realities of (1) dynamic and multiple risks, and (2) non-expected utility (non-EU) behavior. Our results suggest both self-protection and self-insurance decrease for any one risk when cumulative dynamic risks are large and when multiple risks exist. If people are non-EU maximizers, self-protection and self-insurance also decline when they follow the conservatism heuristic (insufficient weighting of new information). In addition, if non-EU people over- and under-weight probabilities of bad states, they can invest non-linearly in self-protection and self-insurance.
Abstract
The theory of endogenous risk captures the idea that people self-protect and self-insure to reduce risks to human and environmental health. Herein we extend the standard static model to include the realities of (1) dynamic and multiple risks, and (2) non-expected utility (non-EU) behavior. Our results suggest both self-protection and self-insurance decrease for any one risk when cumulative dynamic risks are large and when multiple risks exist. If people are non-EU maximizers, self-protection and self-insurance also decline when they follow the conservatism heuristic (insufficient weighting of new information). In addition, if non-EU people over- and under-weight probabilities of bad states, they can invest non-linearly in self-protection and self-insurance.
참고문헌 (41)
- Agee, M. D, "Children’s Health Benefits of Reducing Environmental Tobacco Exposure: Evidence from Parents who Smoke", Empirical Economics, 32, pp.217~237 (2007)
- Bleda, M, "The Formation of Belief in Climate Change in Business Organizations: A Dynamic Simulation Model", Tyndall Center Working paper, 68 (2005)
- Bhattacharya, S, "The Value of Mortality Risk Reductions in Delhi, India", Journal of Risk and Uncertainty, 34, pp.21~47 (2007)
- Blomquist,G, "Self-protection and Averting Behavior, Values of Statistical Lives, and Benefit Cost Analysis of Environmental Policy", Review of Economics of the Household, 2, pp.89~110 (2004)
- Clarke,R., "Consumption", Pollution Tradeoffs in an Environment Vulnerable to Pollution Related Catastrophic Collapse, 1994, pp.18, 991~1010
- Chapman,C, "Prior Probability Bias in Information Seeking and Opinion Revisions", American Journal of Psychology, 86(2), pp.269~82 (1973)
- Dosman, D, "Socioeconomic Determinants of Health and Food Safety Related Risk Perceptions", Risk Analysis, 21, pp.307~317 (2001)
- Edwards,W, "Conservatism in Human Information Processing", pp.17~52 (1968), New York: Wiley& Sons
- Ehrlich, I, "Market Insurance, Self-insurance, and Selfprotection", Journal of Political Economy, 80, pp.623~648 (1972)
- Ganderton, P, "Buying Insurance for Disaster Type Risks: Experimental Evidence", Journal of Risk and Uncertainty, 20, pp.271~289 (2000)
- Gonzalez, R, "On the Shape of Probability Weighting Function", Cognitive Psychology, 38, pp.129~166 (1999)
- Houtven, G, "Cancer Premiums and Latency Effects: A Risk Tradeoff Approach for Valuing Reductions in Fatal Cancer Risks", Journal of Risk and Uncertainty, 36, pp.179~199 (2008)
- Hurley, T, "An Experimental Comparison of Induced and Elicited Beliefs", Journal of Risk and Uncertainty, 30, pp.169~188 (2005)
- Kane, S, "Linking Adaptation and Mitigation in Climate Change Policy", Climatic Change, 46, pp.75~102 (2000)
- Konrad, K, "Self-insurance and Self-Protection: A Non-Expected Utility Analysis", Geneva Papers on Risk and Insurance Theory, 18, pp.131~146 (1993)
- Leiserowitz,A, "Climate Change Risk Perception and Policy Preferences: The Role of Affect, Imagery, and Values", Climatic Change, 77, pp.45~72 (2006)
- Lichtenstein,Sarah, "Judged Frequency of Lethal Events", Journal of Experimental Psychology: Human Learning and Memory, 4, pp.551~578 (1978)
- Lorenzoni, I, "Public Views on climate Change:European and USA Perspectives", Climatic Change, 77, pp.73~95 (2006)
- Machina,M, "Non-Expected Utility and Robustness of the Classical Insurance Paradigm", Geneva Papers on Risk and Insurance Theory, 20, pp.9~50 (1995)
- Muermann, A, "Self-protection and Insurance with Interdependencies", Journal of Risk and Uncertainty, 36, pp.103~123 (2008)
- "Global Warming may Pump up Hurricane Power"[URL]
- Oppenheimer, M, "Global Warming: The Psychology of Long Term Risk", Climatic Change, 77, pp.1~6 (2006)
- Pidgeon, N, "The Social Amplification of Risk" (2003), Cambridge: Cambridge University Press
- Piketty,T, "Social Mobility and Redistributive Politics", Quarterly Journal of Economics, 110, pp.551~584 (1995)
- Prelec,D, "The Probability Weighting Function", Econometrica, 66, pp.497~527 (1998)
- Protiere, C, "The Impact of Information on Non-Health Attributes on the willingness to pay for Multiple Health Care Programmes", Social Science and Medicine, 58, pp.1257~1269 (2004)
- Reed,W, "Optimal Harvesting of a Fishery Subject to Random Catastrophic Collapse", IMA Journal of Mathematics Applied in Medicine and Biology, 5, pp.215~235 (1988)
- Reed, W, "The Conservation and Exploitation of Vulnerable Resources", Bulletin of Mathematical Biology, 54, pp.185~207 (1992)
- Rott,H, "The Two Dogmas of Belief Revision", Journal of Philosophy, 97, pp.503~522 (2000)
- Shogren, J, "Risk, Self-Protection, and Ex Ante Economic Value", Journal of Environmental Economics and Management, 20, pp.1~15 (1991)
- Shogren, J, "Risk and its Consequences", Journal of Environmental Economics and Management, 37, pp.44~52 (1999)
- Rosen,S, "Valuing Health Risks", American Economic Review Papers and Proceedings, 71, pp.241~45 (1981)
- Shavell,S, "On Moral Hazard and Insurance", Quarterly Journal of Economics, 93, pp.541~562 (1979)
- Starmer,C, "Developments in the Non-Expected Utility Theory: The Hunt for a Descriptive Theory of Choice under Risk", Journal of Economic Literature, pp.331~382 (2000)
- Sterman, J, "Cloudy Skies: Assessing Public Understanding of Global Warming", System Dynamic Review, 18, pp.207~240 (2002)
- Shackley, P, "Should We Use Willingness to Pay to Elicit Community Preferences for Health Case? New Evidence from using a ‘Marginal’ Approach", Journal of Health Economics, 21, pp.971~991 (2002)
- Sunstein,C, "Risk and Reason" (2002), Cambridge: Cambridge University Press
- Tversky, A, "Advances in Prospect Theory:Cumulative Representation of Uncertainty", Journal of Risk and Uncertainty, 5, pp.297~323 (1992)
- Tella, R, "The Formation of Beliefs:Evidence from the Allocation of Land Titles to Squatters", Quarterly Journal of Economics, 122, pp.209~241 (2007)
- Viscusi, W, "The Perception and Valuation of Risks of Climate Change: A Rational and Behavioral Blend", Climatic Change, 77, pp.151~177 (2006)
- Anderson, H, "Perception of Own Death Risk: An Analysis of Road Traffic and Overall Mortality Risk", Journal of Risk and Uncertainty, 34, pp.67~84 (2007)
