Probabilistic insurance is an insurance policy involving a small probability that the consumer will not be reimbursed. Survey data suggest that people dislike probabilistic insurance and demand more than a 20% reduction in the premium to compensate for a 1% default risk. While these preferences...

This paper provides a characterization of QALYs, the most important outcome measure in medical decision making, in the context of a general rank dependent utility model. We show that both for chronic and for nonchronic health states the characterization of QALYs depends on intuitive conditions....

Regulatory costs are paid by individuals, which leaves them with less disposable income. Since individuals on average use additional income to make their lives safer and healthier, the regulatory costs lead to higher mortality risks and fatalities. Based on data from the National Longitudinal...

A fundamental principle of psychophysics is that people's ability to discriminate change in a physical stimulus diminishes as the magnitude of the stimulus increases. We find that people also exhibit diminished sensitivity in valuing lifesaving interventions against a background of increasing...

In making all-or-none choices between alternative securities, Samuelson (1997) suggested that investors of different risk-aversion should calculate from past samples of those securities their relevant Harmonic Means, or Geometric means, or other associative means representative of their...

This paper uses a Bayesian learning model to assess the respective influence of different risk measurements on mortality risk perceptions. People form risk beliefs using several sources of information, including the actual population mean death risk level the discounted lost life expectancy, and...

Distrust of social institutions is becoming an important component of risk communication and policy analysis. To assess the impact of social distrust on decision making, we examine the role of distrust of information sources on the willingness to accept a hazardous waste disposal facility in...

It is widely believed that people are willing to expend greater resources to save the lives of identified victims than to save equal numbers of unidentified or statistical victims. There are many possible causes of this disparity which have not been enumerated previously or tested empirically....

Adverse selection, moral hazard and crowding out by public insurance have all been proposed as theoretical reasons for why the market for private long-term care insurance has been slow to evolve in the U.S. Using national samples of the elderly and near elderly, this study investigates which is...

Different risks of death are not equivalent because of differences in timing. This paper develops measures of mortality risks that recognize the probability of death, the duration of life lost, and the role of discounting. These adjustments lead to a substantial reordering of the major causes of...