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Overreaction to Fearsome Risks

15 Pages Posted: 14 Jan 2009  

Richard J. Zeckhauser

Harvard University - Harvard Kennedy School (HKS); National Bureau of Economic Research (NBER)

Cass R. Sunstein

Harvard Law School; Harvard University - Harvard Kennedy School (HKS)

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Date Written: December 18, 2008

Abstract

Fearsome risks are those that stimulate strong emotional responses. Such risks, which usually involve high consequences, tend to have low probabilities, since life today is no longer nasty, brutish and short. In the face of a low-probability fearsome risk, people often exaggerate the benefits of preventive, risk-reducing, or ameliorative measures. In both personal life and politics, the result is damaging overreactions to risks. We offer evidence for the phenomenon of probability neglect, failing to distinguish between high and low-probability risks. Action bias is a likely result.

Keywords: Business and Government Policy, Microeconomics, Ethics/Political Philosophy, Law and Legal Institutions, Science¿ Technology and Public Policy

Suggested Citation

Zeckhauser, Richard J. and Sunstein, Cass R., Overreaction to Fearsome Risks (December 18, 2008). HKS Working Paper No. RWP08-079. Available at SSRN: https://ssrn.com/abstract=1327304 or http://dx.doi.org/10.2139/ssrn.1327304

Richard Zeckhauser (Contact Author)

National Bureau of Economic Research (NBER) ( email )

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Harvard University - Harvard Kennedy School (HKS) ( email )

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Cass Sunstein

Harvard Law School ( email )

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Harvard University - Harvard Kennedy School (HKS) ( email )

79 John F. Kennedy Street
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