It is widely argued that individuals have biased perceptions of health and safety risks. A reconsideration of the best-known evidence suggests that this view is the erroneous result of a failure to consider the implications of scarce information. Our findings imply that the hypothesis that...

Evidence is presented to show that people are willing to pay a premium to avoid "bad deaths"--deaths that are especially dreaded, uncontrollable, involuntarily incurred, and inequitably distributed. Public judgments of this kind help explain the demand for regulation. But some of these judgments...

We estimate the value of a 'blip', i.e. an immediate small reduction, in the hazard rate for a random sample of Swedes. Since the risk reduction is age-independent (2 'extra saved lives' out of 10,000 during the next year), we can examine how the value of a statistical life varies with age. We...

Standard portfolio analysis presumes one can blend different securities continuously. When one must choose all of one portfolio or all of another, we are in stochastic digital programming: either-or, zero-or-one choice. The algorithm for doing this optimally is shown to be simpler than in real...

Three reasons for why people may evaluate utility in a rank-dependent fashion have been suggested: (a) rank-dependent weighting is a function of perceptual biases and thus not prescriptively defensible; (b) weights are (re)distributed by motivational processes that reflect stable personality...

Holding more of the riskless asset and insuring the risky asset are two ways to reduce portfolio risk. These methods can be employed jointly. As a result, the amount of insurance selected to indemnify against possible losses from holding a risky asset depends, in general, on the quantities of...

This paper analyzes the extent of offsetting behavior using survey data on risk beliefs about skin cancer and precautionary actions that people can take to avoid this disease. The perspective taken is that, at conception, people are "installed" with differing genetic characteristics, such as...

To estimate the discount rate for lives saved in the future a number of studies have been carried out on the trade-off between saving lives now and in the future. A telephone survey is administered to about 1,700 individuals to test if the framing of the question affects the estimated trade-off....

This article characterizes a family of preference relations over uncertain prospects that (a) are dynamically consistent in the Machina sense and, moreover, for which the updated preferences are also members of this family and (b) can simultaneously accommodate Ellsberg- and Allais-type...