Risk Perception, Ambiguity, and Nuclear-Waste Transport
Although ambiguity has received ample attention in the theoretical expected-utility literature, measures of ambiguity are rare. Here, I present a framework for eliciting and estimating risk and ambiguity simultaneously using a risk ladder. The model, based on a variant of the induced-distribution approach of Hill, Perry, and Willis (2007, Estimating Knightian uncertainty with survival probability questions on the HRS, unpublished paper, University of Michigan), allows me to estimate risk and ambiguity jointly and derive the correlation between the two. The approach allows for heterogeneity and measurement error in the perceived risk distribution. I apply the model to data from a survey of perceived mortality risk from transporting radioactive waste to the proposed Yucca Mountain facility. The data suggest that the public perceives transport risk well in excess of that estimated by the U.S. Department of Energy. Moreover, the perceived risks are highly ambiguous. The success (and cost) of transport plans may hinge on planners’ ability to reassure and educate the public about the true risks of transport.
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Volume (Year): 75 (2009)
Issue (Month): 3 (January)
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