When Risk Perception Gets in the Way: Probability Weighting and Underprevention

Baillon, Aurélien; Bleichrodt, Han; Emirmahmutoglu, Aysil; Jaspersen, Johannes G.; Peter, Richard

doi:10.2139/ssrn.3199867

Cited by 7 publications

(6 citation statements)

References 91 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…We can see that the global measure of absolute attractiveness (AA) depends on both parameters (a and b). It is essentially the same value suggested by [44], [51] and [54] (which is equal to (2a + b)/2). As for the indexes, linear transformations (normalizations) do not affect them.…”

Section: Neo-additive Weighting Functionssupporting

confidence: 73%

“…[44], [51] and [54] also suggested 1 − b as a index of likelihood sensitivity, which we can relate with our measure of discriminability. Both terminologies are connected by the idea of diminishing sensitivity of probabilities ( [3]).…”

Section: Literaturementioning

confidence: 92%

“…In this section we apply our measures to the most common twoparametric families of weighting functions found in the literature: NEO-addtive ( [12], [44], [51] and [54]), CRS ( [15] and [12]), ), Prelec ([11] and [36]).…”

Section: Applicationmentioning

confidence: 99%

“…For instance, [46] proposed indexes of optimism (which we can relate with attractiveness) and indexes of likelihood insensitivity (which is related to discriminability) for Goldstein-Einhorn and Prelec weighting functions. [44], [51] and [54] proposed, and used in experimental works, both indexes for NEO-additive weighting functions. [12] suggested an index of relative optimism (which is related to attractiveness) and an index of relative sensitivity (which is related to discriminability) for CRS.…”

Section: Applicationmentioning

confidence: 99%

See 3 more Smart Citations

Essays on Behavioral Finance

NASCIMENTO¹

View full text Add to dashboard Cite

show abstract

Section: Neo-additive Weighting Functionssupporting

confidence: 73%

Section: Literaturementioning

confidence: 92%

Section: Applicationmentioning

confidence: 99%

Section: Applicationmentioning

confidence: 99%

See 2 more Smart Citations

Essays on Behavioral Finance

NASCIMENTO¹

View full text Add to dashboard Cite

show abstract

“…As explained in our discussion of probability weighting, sensitivity to probability influences perceived marginal benefits (Baillon et al 2018). If we add to this Courbage and Rey's (2006) finding that dread influences the marginal benefits of prevention along with what we just learned about ambiguity, then there are two reinforcing factors that increase the perceived marginal benefits of prevention in a terrorism context: (1) probability weighting and (2) dread.…”

Section: Prudence and Preventionmentioning

confidence: 90%

Terrorism, lightning and falling furniture

Phillips

Pohl

2019

Behavioral Sciences of Terrorism and Political Aggression

View full text Add to dashboard Cite

From time to time, opinion pieces appear in the media that point out that the risk of being harmed by terrorism is very low. This much is true, at least from an actuarial perspective. These opinion pieces are often accompanied by lists of other, usually absurd, ways that a person is more likely to die, including being struck by lightning or crushed by falling furniture. When asked, people do state a likelihood of being harmed by terrorism that is much greater than the actuarial odds. But risk perception is complex and to many people the actuarial odds of being killed by terrorism versus being killed by falling furniture do not adequately reflect the differences in the nature of risks from these two things. A discussion about risk perception and terrorism cannot start and end with the conclusion that people simply overestimate the risk. To do so would be to overlook the nuances of risk perception and decision-making under conditions of risk and uncertainty. An understanding of the complex ways in which risk perceptions are shaped is essential for those who would seek to accurately characterise, compare and regulate risks in the terrorism context.

show abstract

A fresh look at primary prevention for health risks

Peter

2021

Health Economics

Self Cite

View full text Add to dashboard Cite

The author analyzes how risk preferences affect primary prevention for health risks using Kihlstrom and Mirman (1974) transformation function approach. This ensures consistency of ordinal preferences. Higher risk aversion may increase or decrease optimal prevention depending on a probability threshold.Higher downside risk aversion always has a negative effect on optimal prevention. Our findings corroborate the role of downside risk aversion as an important determinant of optimal prevention for health risks but renders fear of sickness irrelevant. We also point out several unique properties of prevention for health risks compared to financial risks.

show abstract

When Risk Perception Gets in the Way: Probability Weighting and Underprevention

Cited by 7 publications

References 91 publications

Essays on Behavioral Finance

Essays on Behavioral Finance

Terrorism, lightning and falling furniture

A fresh look at primary prevention for health risks

Contact Info

Product

Resources

About