Risk-Taking Behavior in the Wake of Natural Disasters
We investigate whether experiencing a natural disaster affects risk-taking behavior. We conduct standard risk games (using real money) with randomly selected individuals in rural Indonesia. We find that individuals who recently suffered a flood or earthquake exhibit more risk-aversion. Experiencing a natural disaster causes people to perceive that they now face a greater risk of a future disaster. We conclude that this change in perception of background risk causes people to take fewer risks. We provide evidence that experimental risk behavior is correlated with real-life risk behavior, highlighting the importance of our results.
Year of publication: |
2015
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Authors: | Cameron, Lisa ; Shah, Manisha |
Published in: |
Journal of Human Resources. - University of Wisconsin Press. - Vol. 50.2015, 2
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Publisher: |
University of Wisconsin Press |
Saved in:
Online Resource
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