Lecture 11

Question 1

Risk assessment, perception, attitudes

Answer 1

risk assessment: academic/intellectual field of
identifying, characterizing, and quantifying risks

risk perception: intuitive risk judgments

risk attitudes: preferences that influence willingness to take risks

Question 2

Revealed risk perceptions vs. constructed risk perceptions

Answer 2

Whether risk attitudes are consistent/stable over time. However it seems like risk perception is constructed as dependent on emotions, situation, relative, dimensions of risk, domain specificity

Question 3

Dread risk

Answer 3

The amount of fear/emotion a risk provokes: global, catastrophic, fatal, high risk for future generations, not easily reduced, involuntary, no escape

Question 4

Unknown risk

Answer 4

Something that is not well understood like global warning: effect delated, new risk, risks unknown to science

Question 5

Factor analysis

Answer 5

How we can figure out which characteristics of risk relate to dread and which to unknown. This can help us analyze constructs that are difficult to measure directly - create questions that measure dread for example.

Question 6

Relativity of risk perception

Answer 6

Numerical estimation of risk is not absolute but rather depends on comparisons. Ranking is more consistent than numbers

Question 7

Finite resources for worrying

Answer 7

Finite pool of worry - Limited mental resources -> limited capacity for worry. If we are concerned about terrorism our overall level of concern doesn’t increase because some other worry leaves pool.

Question 8

Emotion and risk

Answer 8

If we don’t have time, or if emotion is strong, we use System 1 (quick, intuitive, automatic) to act

Question 9

Affect heuristic

Answer 9

We perceive risks to be negatively correlated with benefits. So for outcomes we like, we rate the ratio of benefits to risk higher. Dread and fear accentuate risk; anger makes it seem lower - but why?

Question 10

Probability neglect

Answer 10

All-or-none mentality - if we really like or hate an outcome, it doesn’t matter if the chance is small. We neglect the probability

Question 11

Optimism bias

Answer 11

We act like rare, good events are more likely to occur than (equally) rare, bad events

Question 12

Denominator neglect

Answer 12

We ignore denominators and focus on numerators when calculating probabilities

Question 13

Insensitivity to numbers

Answer 13

Saving 98% of 150 lives garners more support than saving 150 lives because 150 is good but vague - 98% seems more certain. Proportion more important than number

Question 14

Contingent valuation

Answer 14

Difficult to assess value of things that can’t be assigned price such as lives and environmental damage; resources that have no market; things that can’t be sold for moral reasons. Contingent valuation assigns values to these things via looking at willingness to pay to reduce risk/damage and willingness to accept additional risk/damage

Question 15

Embedding effect

Answer 15

people are willing to spend same amount to save one lake as to save 100 lakes

Question 16

Outrage effect

Answer 16

“prices” provided are greater for human-caused damage than for equal amount of natural damage (punishing the wrongdoer)