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Risk Perception of Traffic Participants

Listed author(s):
  • Arianne de Blaeij

    ()

    (Vrije Universiteit Amsterdam)

  • Daniel van Vuuren

    ()

    (Vrije Universiteit Amsterdam)

In this paper we study the risk perception of traffic participants. Firstly, we give an overviewof previously used methodologies for the monetary valuation of transport safety. Thesemethodologies do not distinguish between the individual's assessment of probabilities and hervaluation of possible outcomes. A great disadvantage of these approaches is therefore that onehas to make the assumption that people correctly perceive the probabilities. Prospect theorydoes not make this assumption. Our procedure, which is based on this methodology, consistsof three steps. The first step is to determine the certainty equivalent for avoiding roadaccidents. The second step is the elicitation of the utility function. The final step is theelicitation of the probability weighting function. With this information we directly obtain theperceived value of the probability for accident Ai.The first, tentative, results show that the valuation of losses is wellrepresented by a utility function that is concave in shape. Secondly, ourpreliminary results show that when people have to choose whether or not toparticipate in a potentially risky activity with a low probability of the "badoutcome" (say ? 1/100), they base their decision on the possible outcomes ofthe activity rather than on the probabilities involved. The empiricalconclusion is therefore that people base their final decision mainly on thepossible outcomes and not so much on probabilities whenever there are verysmall probabilities involved.

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Paper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 01-027/3.

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Date of creation: 05 Mar 2001
Handle: RePEc:tin:wpaper:20010027
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  1. Jondrow, James & Bowes, Marianne & Levy, Robert, 1983. "The Optimal Speed Limit," Economic Inquiry, Western Economic Association International, vol. 21(3), pages 325-336, July.
  2. Benjamin, Daniel K & Dougan, William R, 1997. "Individuals' Estimates of the Risks of Death: Part I--A Reassessment of the Previous Evidence," Journal of Risk and Uncertainty, Springer, vol. 15(2), pages 115-133, November.
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  4. Wiktor Adamowicz & Peter Boxall & Michael Williams & Jordan Louviere, 1998. "Stated Preference Approaches for Measuring Passive Use Values: Choice Experiments and Contingent Valuation," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 80(1), pages 64-75.
  5. Liu, Jin-Tan & Hsieh, Chee-Ruey, 1995. "Risk Perception and Smoking Behavior: Empirical Evidence from Taiwan," Journal of Risk and Uncertainty, Springer, vol. 11(2), pages 139-157, September.
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  7. Viscusi, W Kip, 1990. "Do Smokers Underestimate Risks?," Journal of Political Economy, University of Chicago Press, vol. 98(6), pages 1253-1269, December.
  8. Kahneman, Daniel & Tversky, Amos, 1979. "Prospect Theory: An Analysis of Decision under Risk," Econometrica, Econometric Society, vol. 47(2), pages 263-291, March.
  9. Viscusi, W Kip, 1991. "Age Variations in Risk Perceptions and Smoking Decisions," The Review of Economics and Statistics, MIT Press, vol. 73(4), pages 577-588, November.
  10. Dolan, P. & Gudex, C. & Kind, P. & Williams, A., 1996. "Valuing health states: A comparison of methods," Journal of Health Economics, Elsevier, vol. 15(2), pages 209-231, April.
  11. Morris, Louis A & Swasy, John L & Mazis, Michael B, 1994. " Accepted Risk and Alcohol Use during Pregnancy," Journal of Consumer Research, Oxford University Press, vol. 21(1), pages 135-144, June.
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