Low-probability rational spillovers
We find evidence of "rationality spillovers" in low-probability high-severity risks. People adjust their valuation of high probability events and preferences as they reduce preference reversals. We find insensitivity to scope for food safety illnesses with the lowest probabilities.
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- Todd L. Cherry & Thomas Crocker & Jason F. Shogren, 2001.
01-02, Department of Economics, Appalachian State University.
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"Valuing Food Safety in Experimental Auction Markets,"
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Agricultural and Applied Economics Association, vol. 77(1), pages 40-53.
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- Chu, Yun-Peng & Chu, Ruey-Ling, 1990. "The Subsidence of Preference Reversals in Simplified and Marketlike Experimental Settings: A Note," American Economic Review, American Economic Association, vol. 80(4), pages 902-11, September.
- Arrow, Kenneth J, 1986. "Rationality of Self and Others in an Economic System," The Journal of Business, University of Chicago Press, vol. 59(4), pages S385-99, October.
- McClelland, Gary H & Schulze, William D & Coursey, Don L, 1993. "Insurance for Low-Probability Hazards: A Bimodal Response to Unlikely Events," Journal of Risk and Uncertainty, Springer, vol. 7(1), pages 95-116, August.
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