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Overreaction to Fearsome Risks

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  • Zeckhauser, Richard

    (Harvard University)

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.

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Bibliographic Info

Paper provided by Harvard University, John F. Kennedy School of Government in its series Working Paper Series with number rwp08-079.

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Date of creation: Dec 2008
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Handle: RePEc:ecl:harjfk:rwp08-079

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  1. Patt, Anthony & Zeckhauser, Richard, 2000. " Action Bias and Environmental Decisions," Journal of Risk and Uncertainty, Springer, vol. 21(1), pages 45-72, July.
  2. Amos Tversky & Daniel Kahneman, 1979. "Prospect Theory: An Analysis of Decision under Risk," Levine's Working Paper Archive 7656, David K. Levine.
  3. James T. Hamilton & W. Kip Viscusi, 1999. "Calculating Risks?: The Spatial and Political Dimensions of Hazardous Waste Policy," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262082780, January.
  4. Sunstein,Cass R., 2002. "Risk and Reason," Cambridge Books, Cambridge University Press, number 9780521791991, November.
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Cited by:
  1. Kousky, Carolyn & Rostapshova, Olga & Toman, Michael & Zeckhauser, Richard, 2009. "Responding to Threats of Climate Change Mega-Catastrophes," Discussion Papers dp-09-45, Resources For the Future.
  2. Olivier Chanel & Graciela Chichilnisky, 2009. "The influence of fear in decisions: Experimental evidence," Journal of Risk and Uncertainty, Springer, vol. 39(3), pages 271-298, December.
  3. James K. Hammitt, 2013. "Positive versus Normative Justifications for Benefit-Cost Analysis: Implications for Interpretation and Policy," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 7(2), pages 199-218, July.
  4. Gernot Wagner & Richard Zeckhauser, 2012. "Climate policy: hard problem, soft thinking," Climatic Change, Springer, vol. 110(3), pages 507-521, February.
  5. Tim Krieger, 2011. "9/11's Legacy: How Abstract Fear and Collective Memory Lead to Real Economic Costs," Working Papers 45, University of Paderborn, CIE Center for International Economics.

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