|
|
|
|
||||
|
||||
Variation in Risk Seeking Behavior in a Natural Experiment on Large Losses Induced by a Natural DisasterLionel PageQueensland University of Technology - Judge Business School, University of Cambridge David A. SavageQueensland University of Technology Benno TorglerQueensland University of Technology; CREMA; CESifo (Center for Economic Studies and Ifo Institute for Economic Research) July 18, 2012 CESifo Working Paper Series No. 3878 Abstract: This study explores people’s risk attitudes after having suffered large real-world losses following a natural disaster. Using the margins of the 2011 Australian floods (Brisbane) as a natural experimental setting, we find that homeowners who were victims of the floods and face large losses in property values are 50% more likely to opt for a risky gamble – a scratch card giving a small chance of a large gain ($500,000) - than for a sure amount of comparable value ($10). This finding is consistent with prospect theory predictions of the adoption of a risk-seeking attitude after a loss.
Number of Pages in PDF File: 18 Keywords: decision under risk, large losses, natural experiment JEL Classification: D030, D810, C930 working papers seriesDate posted: July 19, 2012Suggested CitationContact Information
|
|
|||||||||||||||||||||||
© 2013 Social Science Electronic Publishing, Inc. All Rights Reserved.
FAQ
Terms of Use
Privacy Policy
Copyright
This page was processed by apollo1 in 2.125 seconds
