Please use this identifier to cite or link to this item: http://hdl.handle.net/1959.14/142790
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- Title
- Dynamic endogenous risks & non-expected utility behavior
- Related
- Korean economic review, Vol. 25, Issue 2, (2009), p.215-240
- Related
- http://www.kea.ne.kr/upload/catalogue_file/5034b01275b2f9b23f6ce3c4224e215d.pdf
- Publisher
- Korean Economic Association
- Date
- 2009
- Author/Creator
- Ranjan, Ram
- Author/Creator
- Shogren, Jason F
- Description
- The theory of endogenous risk captures the idea that people self-protect and self-insure to reduce risks to human and environmental health. Herein we extend the standard static model to include the realities of (1) dynamic and multiple risks, and (2) non-expected utility (non-EU) behavior. Our results suggest both self-protection and self-insurance decrease for any one risk when cumulative dynamic risks are large and when multiple risks exist. If people are non-EU maximizers, self-protection and self-insurance also decline when they follow the conservatism heuristic (insufficient weighting of new information). In addition, if non-EU people over- and under-weight probabilities of bad states, they can invest non-linearly in self-protection and self-insurance.
- Description
- 26 page(s)
- Subject Keyword
- Self-insurance
- Subject Keyword
- Self-Protection
- Subject Keyword
- Perception
- Subject Keyword
- Probability Weighting
- Subject Keyword
- Risk Resilience
- Resource Type
- journal article
- Organisation
- Macquarie University. Graduate School of the Environment
- Identifier
- http://hdl.handle.net/1959.14/142790
- Identifier
- ISSN:0254-3737
- Identifier
- mq_res-20110818-083917
- Language
- eng
