When strong emotions are involved, people tend to focus on the badness of the outcome, rather than on the probability that the outcome will occur. The resulting "probability neglect" helps to explain excessive reactions to low-probability risks of catastrophe. Terrorists show a working knowledge...

Adam Smith's idea that wage differences reveal preferences for risk rests on strong theoretical foundations. This paper argues, however, that the dominant approach to identify compensating wage differentials--regressing individual wages on aggregate measures of risk--may lead to arbitrary...

Do firms have adequate incentives to invest in protection against a risk whose magnitude depends on the actions of others? This paper characterizes the Nash equilibria for this type of interaction between agents, which we call the interdependent security (IDS) problem. When agents are identical,...

We combine two research lines: preference reversal research (Lichtenstein and Slovic, 1971) and research on lottery-based risk preference induction (Roth and Malouf, 1979). Our results are informative for both research lines. We show that inducing risk preferences in preference reversal...

I present evidence on the cost-effectiveness of 76 regulatory actions promulgated by the Federal government from 1967 to 2001 by updating similar work published by the author in 1986. The paper first responds to several critiques of the original article recently published in prominent law...

This article constructs measures of job fatality rates for black and white workers using information on job-related fatalities from 1992-1997. The fatality rates for black employees are somewhat greater than those for whites. Each of these groups receives significant compensating wage...

Although it has been claimed that people care more about identifiable than statistical victims, demonstrating this "identifiable victim effect" has proven difficult because identification usually provides information about a victim, and people may respond to the information rather than to...

We develop a "perceived hazard" model that estimates consumers' endogenous risk perceptions about products. These perceptions are then linked to a model of product choice. Our approach thus departs from the expected utility model that depends upon external risk assessments. In an application to...

Our survey results demonstrate that targeted screening of airline passengers raises conflicting concerns of efficiency and equity. Support for profiling increases if there is a substantial reduction in avoided delays to other passengers. The time cost and benefit components of targeting affect...

Miyamoto's generic utility theory (GUT) is a bilinear form that captures a diverse set of utility formulations. The present study, using mixed gambles, experimentally evaluates GUT in a fashion similar to the Chechile and Cooke and the Chechile and Butler studies, but employs a novel method of...