Eliciting Risk and Time Preferences

We design experiments to jointly elicit risk and time preferences for the adult Danish population. Since subjects are generally risk averse, we find that joint elicitation provides estimates of discount rates that are significantly lower than those found in previous studies and more in line with what would be considered as a priori reasonable rates. The statistical specification relies on a theoretical framework that involves a latent trade‐off between long‐run optimization and short‐run temptation. Estimation of this specification is undertaken using structural, maximum likelihood methods. Our main results based on exponential discounting are robust to alternative specifications such as hyperbolic discounting. These results have direct implications for attempts to elicit time preferences, as well as debates over the appropriate domain of the utility function when characterizing risk aversion and time consistency.     

Coupling the Biophysical and Social Dimensions of Wildfire Risk to Improve Wildfire Mitigation Planning

We describe recent advances in biophysical and social aspects of risk and their potential combined contribution to improve mitigation planning on fire‐prone landscapes. The methods and tools provide an improved method for defining the spatial extent of wildfire risk to communities compared to current planning processes. They also propose an expanded role for social science to improve understanding of community‐wide risk perceptions and to predict property owners’ capacities and willingness to mitigate risk by treating hazardous fuels and reducing the susceptibility of dwellings. In particular, we identify spatial scale mismatches in wildfire mitigation planning and their potential adverse impact on risk mitigation goals. Studies in other fire‐prone regions suggest that these scale mismatches are widespread and contribute to continued wildfire dwelling losses. We discuss how risk perceptions and behavior contribute to scale mismatches and how they can be minimized through integrated analyses of landscape wildfire transmission and social factors that describe the potential for collaboration among landowners and land management agencies. These concepts are then used to outline an integrated socioecological planning framework to identify optimal strategies for local community risk mitigation and improve landscape‐scale prioritization of fuel management investments by government entities.     

Risk Preferences in Strategic Wildfire Decision Making: A Choice Experiment with U.S. Wildfire Managers

Federal policy has embraced risa management as an appropriate paradigm for wildfire management. Economic theory suggests that over repeated wildfire events, potential economic costs and risas of ecological damage are optimally balanced when management decisions are free from biases, risa aversion, and risa seeking. Of primary concern in this article is how managers respond to wildfire risa, including the potential effect of wildfires (on ecological values, structures, and safety) and the likelihood of different fire outcomes. We use responses to a choice experiment questionnaire of U.S. federal wildfire managers to measure attitudes toward several components of wildfire risa and to test whether observed risa attitudes are consistent with the efficient allocation of wildfire suppression resources. Our results indicate that fire managers’ decisions are consistent with nonexpected utility theories of decisions under risa. Managers may overallocate firefighting resources when the likelihood or potential magnitude of damage from fires is low, and sensitivity to changes in the probability of fire outcomes depends on whether probabilities are close to one or zero and the magnitude of the potential harm.     

Government Risk Management Priorities: A Comparison of the Preferences of Asian Indian Americans and Other Americans

A survey was conducted of approximately 200 Asian Indian Americans and 200 other residents of New Jersey in order to understand the risk management priorities that they want government to have. We found that Asian Indian Americans, especially younger women, focused on personal/family risks, such as alcohol and drug abuse, sexual abuse, and domestic violence. The New Jersey comparison group, in contrast, placed war/terrorism and loss of health care services and insurance at the top of their priorities for government. These results suggest stressful acculturation-related issues within the Asian Indian community. Both populations want more risk management from government than they believe government is currently providing. Respondents who wanted more from government tended to dread the risk, be fearful of the consequences, trust government, and have a feeling of personal efficacy. Within the Asian Indian American sample, wide variations were observed by language spoken at home and religious affiliation. Notably, Muslims and Hindi language speakers tended not to trust government and hence wanted less government involvement. This study supports our call for studies of recent migrant populations and Johnson's for testing ethnic identity and acculturation as factors in risk judgments.     

Wildfire Exposure Analysis on the National Forests in the Pacific Northwest,USA

We analyzed wildfire exposure for key social and ecological features on the national forests in Oregon and Washington. The forests contain numerous urban interfaces, old growth forests, recreational sites, and habitat for rare and endangered species. Many of these resources are threatened by wildfire, especially in the east Cascade Mountains fire‐prone forests. The study illustrates the application of wildfire simulation for risk assessment where the major threat is from large and rare naturally ignited fires, versus many previous studies that have focused on risk driven by frequent and small fires from anthropogenic ignitions. Wildfire simulation modeling was used to characterize potential wildfire behavior in terms of annual burn probability and flame length. Spatial data on selected social and ecological features were obtained from Forest Service GIS databases and elsewhere. The potential wildfire behavior was then summarized for each spatial location of each resource. The analysis suggested strong spatial variation in both burn probability and conditional flame length for many of the features examined, including biodiversity, urban interfaces, and infrastructure. We propose that the spatial patterns in modeled wildfire behavior could be used to improve existing prioritization of fuel management and wildfire preparedness activities within the Pacific Northwest region.     

When Does Information about Probability Count in Choices Under Risk?

The question addressed in the present research is whether in naturalistic risky decision environments people are sensitive to information about the probability parameter. In Study 1, we showed that in naturalistic scenarios participants generally revealed little interest in obtaining information about the outcomes and probabilities. Moreover, participants asked fewer questions about probabilities for scenarios containing moral considerations. In Study 2, it was shown that, when supplied with information on probabilities, people could be sensitive to this information. This sensitivity depends on two factors. People were less sensitive to probabilities in scenarios perceived as containing ethical considerations. People were also less sensitive to probabilities when they were faced with a single-choice situation than when they were faced with a series of lotteries with different probabilities. This can be accounted for in terms of the evaluability principle.     

基于概率权重函数和随机占优准则的开放式基金评级

传统的开放式基金评级方法存在两个缺陷,首先是忽视了现实中投资者是如何做决策的,假定投资者对利益和损失的主观态度相同;其次是忽略了现实的样本性质,假定随机收益的样本达到渐近正态的规模。通过期望效用的高阶泰勒序列展开建立超额收益的高阶矩和效用函数的关系,以高阶矩为约束条件估计样本的经验概率,再对经验概率进行决策权重调整。在此基础上,通过扩展夏普比和应用随机占优准则进行基金评级,并对645种开放式基金进行了案例分析。     

Expecting the Unexpected: Predicting Physiological and Psychological Wildfire Preparedness from Perceived Risk,Responsibility, and Obstacles

People who live in wildfire‐prone communities tend to form their own hazard‐related expectations, which may influence their willingness to prepare for a fire. Past research has already identified two important expectancy‐based factors associated with people's intentions to prepare for a natural hazard: Perceived risk (i.e., perceived threat likelihood and severity) and perceived protection responsibility. We expanded this research by differentiating the influence of these factors on different types of wildfire preparedness (e.g., preparations for evacuation vs. for defending the house) and measured actual rather than intended preparedness. In addition, we tested the relation between preparedness and two additional threat‐related expectations: the expectation that one can rely on an official warning and the expectation of encountering obstacles (e.g., the loss of utilities) during a fire. A survey completed by 1,003 residents of wildfire‐prone areas in Perth, Australia, revealed that perceived risk (especially risk severity) and perceived protection responsibility were both positively associated with all types of preparedness, but the latter did not significantly predict preparedness after controlling for other predictors and demographics. Also, the two new expectancy‐based factors were significantly associated with all types of preparedness, and remained significant predictors of some types of preparedness after controlling for other predictors and demographics: the expectation of being able to rely on an official fire warning and expecting to lose electricity both still predicted less preparedness around house resilience, and expecting to lose water still predicted increased planning preparedness. We discuss public policy implications that follow from this research.     

Provision of a Wildfire Risk Map: Informing Residents in the Wildland Urban Interface

Wildfires in the wildland urban interface (WUI) are an increasing concern throughout the western United States and elsewhere. WUI communities continue to grow and thus increase the wildfire risk to human lives and property. Information such as a wildfire risk map can inform WUI residents of potential risks and may help to efficiently sort mitigation efforts. This study uses the survey-based contingent valuation (CV) method to examine annual household willingness to pay (WTP) for the provision of a wildfire risk map. Data were collected through a mail survey of the East Mountain WUI area in the State of New Mexico (USA). The integrated empirical approach includes a system of equations that involves joint estimation of WTP values, along with measures of a respondent's risk perception and risk mitigation behavior. The median estimated WTP is around U.S. $12 for the annual wildfire risk map, which covers at least the costs of producing and distributing available risk information. Further, providing a wildfire risk map can help address policy goals emphasizing information gathering and sharing among stakeholders to mitigate the effects of wildfires.     

Deterrence and Risk Preferences in Sequential Attacker–Defender Games with Continuous Efforts

Most attacker–defender games consider players as risk neutral, whereas in reality attackers and defenders may be risk seeking or risk averse. This article studies the impact of players' risk preferences on their equilibrium behavior and its effect on the notion of deterrence. In particular, we study the effects of risk preferences in a single‐period, sequential game where a defender has a continuous range of investment levels that could be strategically chosen to potentially deter an attack. This article presents analytic results related to the effect of attacker and defender risk preferences on the optimal defense effort level and their impact on the deterrence level. Numerical illustrations and some discussion of the effect of risk preferences on deterrence and the utility of using such a model are provided, as well as sensitivity analysis of continuous attack investment levels and uncertainty in the defender's beliefs about the attacker's risk preference. A key contribution of this article is the identification of specific scenarios in which the defender using a model that takes into account risk preferences would be better off than a defender using a traditional risk‐neutral model. This study provides insights that could be used by policy analysts and decisionmakers involved in investment decisions in security and safety.     

Risk Analysis and Risk Management: An Historical Perspective

This paper reviews the history of risk analysis and risk management, giving special emphasis to the neglected period prior to the 20th century. The overall objective of the paper is to: (1) dampen the prevailing tendency to view present-day concerns about risk in an ahistorical context; (2) shed light on the intellectual antecedents of current thinking about risk; (3) clarify how contemporary ideas about risk analysis and societal risk management differ significantly from the past; and (4) provide a basis for anticipating future directions in risk analysis and management.     

Social Amplification of Wildfire Risk: The Role of Social Interactions and Information Sources

Wildfire is a persistent and growing threat across much of the western United States. Understanding how people living in fire‐prone areas perceive this threat is essential to the design of effective risk management policies. Drawing on the social amplification of risk framework, we develop a conceptual model of wildfire risk perceptions that incorporates the social processes that likely shape how individuals in fire‐prone areas come to understand this risk, highlighting the role of information sources and social interactions. We classify information sources as expert or nonexpert, and group social interactions according to two dimensions: formal versus informal, and generic versus fire‐specific. Using survey data from two Colorado counties, we empirically examine how information sources and social interactions relate to the perceived probability and perceived consequences of a wildfire. Our results suggest that social amplification processes play a role in shaping how individuals in this area perceive wildfire risk. A key finding is that both “vertical” (i.e., expert information sources and formal social interactions) and “horizontal” (i.e., nonexpert information and informal interactions) interactions are associated with perceived risk of experiencing a wildfire. We also find evidence of perceived “risk interdependency”—that is, homeowners’ perceptions of risk are higher when vegetation on neighboring properties is perceived to be dense. Incorporating social amplification processes into community‐based wildfire education programs and evaluating these programs’ effectiveness constitutes an area for future inquiry.     

Determinants of Probability Neglect and Risk Attitudes for Disaster Risk: An Online Experimental Study of Flood Insurance Demand among Homeowners

Little is known about why individuals place either a high or a very low value on mitigating risks of disaster‐type events, like floods. This study uses panel data methods to explore the psychological factors affecting probability neglect of flood risk relevant to the zero end‐point of the probability weighting function in Prospect Theory, and willingness‐to‐pay for flood insurance. In particular, we focus on explanatory variables of anticipatory and anticipated emotions, as well as the threshold of concern. Moreover, results obtained under real and hypothetical incentives are compared in an experiment with high experimental outcomes. Based on our findings, we suggest several policy recommendations to overcome individual decision processes, which may hinder flood protection efforts.     

Direct Inference, Probability, and a Conceptual Gulf in Risk Communication

Differences in the conceptual frameworks of scientists and nonscientists may create barriers to risk communication. This article examines two such conceptual problems. First, the logic of "direct inference" from group statistics to probabilities about specific individuals suggests that individuals might be acting rationally in refusing to apply to themselves the conclusions of regulatory risk assessments. Second, while regulators and risk assessment scientists often use an "objectivist" or "relative frequency" interpretation of probability statements, members of the public are more likely to adopt a "subjectivist" or "degree of confidence" interpretation when estimating their personal risks, and either misunderstand or significantly discount the relevance of risk assessment conclusions. If these analyses of inference and probability are correct, there may be a conceptual gulf at the center of risk communication that cannot be bridged by additional data about the magnitude of group risk. Suggestions are made for empirical studies that might help regulators deal with this conceptual gulf.     

A Hint of Risk: Tradeoffs Between Quantitative and Qualitative Risk Factors

Risk-perception research plays an active role in discussions of risk-management alternatives. However, little guidance is provided regarding how public concerns should be weighed against other sources of cost and benefits. This paper reports the results of two experiments that measure tradeoffs among cost (in dollars), a quantitative risk measure (number of deaths or injuries), and several qualitative characteristics associated with perceived risk. Most subjects were willing to make the requested trade. However, the perceived risk information led others to reject the proposed technology.     

Experimental Evidence Against the Paradigm of Mortality Risk Aversion

This article deals with the question of how societal impacts of fatal accidents can be integrated into the management of natural or man‐made hazards. Today, many governmental agencies give additional weight to the number of potential fatalities in their risk assessments to reflect society's aversion to large accidents. Although mortality risk aversion has been proposed in numerous risk management guidelines, there has been no evidence that lay people want public decisionmakers to overweight infrequent accidents of large societal consequences against more frequent ones of smaller societal consequences. Furthermore, it is not known whether public decisionmakers actually do such overweighting when they decide upon the mitigation of natural or technical hazards. In this article, we report on two experimental tasks that required participants to evaluate negative prospects involving 1–100 potential fatalities. Our results show that neither lay people nor hazard experts exhibit risk‐averse behavior in decisions on mortality risks.     

Separable Preferences,Strategyproofness, and Decomposability

We consider strategyproof social choice functions defined over product domains. If preferences are strict orderings and separable, then strategyproof social choice functions must be decomposable provided that the domain of preferences is rich. We provide several characterization results in the case where preferences are separable only with respect to the elements of some partition of the set of components and these partitions vary across individuals. We characterize the libertarian social choice function and show that no superset of the tops separable domain admits strategyproof nondictatorial social choice functions.     

On The Method of Discrete Probability Distributions in Risk and Reliability Calculations–Application to Seismic Risk Assessment

If the point of view is adopted that in calculations of real-world phenomena we almost invariably have significant uncertainty in the numerical values of our parameters, then, in these calculations, numerical quantities should be replaced by probability distributions and mathematical operations between these quantities should be replaced by analogous operations between probability distributions. Also, practical calculations one way or another always require discretization or truncation. Combining these two thoughts leads to a numerical approach to probabilistic calculations having great simplicity, power, and elegance. The philosophy and technique of this approach is described, some pitfalls are pointed out, and an application to seismic risk assessment is outlined.     

基于风险规避和公平偏好的供应链收益共享契约协调研究

在一个简单的二级供应链系统中,建立了供应商和零售商同时具有风险规避和公平偏好的收益共享契约协调模型,通过修正、扩展FS效用收益模型,先后考察并分析了分散决策和集中决策下供应链的协调状态,研究发现,供应商和零售商的风险规避系数和公平偏好系数及收益份额必须满足特定的条件,收益共享契约才能使系统供应链整体达到协调状态;在此基础上,对风险规避和公平偏好因素进行敏感度分析,得到供应商和零售商行为偏好系数对供应链及成员最优订货量的影响;最后进行演化博弈算例分析和结论验证,体现了该协调模型的有效性和实用性。由此说明供应商和零售商的风险规避和公平偏好因素同时作用会改变系统供应链协调时的最优订货量,并对决策人的决策行为产生很大的影响。     

An Analysis of the de minimis Strategy for Risk Management

A de minimis risk management strategy sets a threshold so that risks below the specified level are defined as trivial and exempted from further consideration. The intended purpose is to help avoid inappropriate and wasteful concern with insignificant low-level risks. In most instances a de minimis strategy is likely to have beneficial or innocuous effects, but under certain circumstances large differences may develop between nominal and actual de minimis levels. The potential for such discrepancies illustrates why de minimis (and all other risk management) strategies should be evaluated on the basis of the portfolio of risks that would accumulate from applying such strategies over time, rather than on the apparent reasonableness of any single instance of application.