A theoretically-consistent empirical model of non-expected utility: An application to nuclear-waste transport |
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| Authors: | Mary Riddel W Douglass Shaw |
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| Institution: | (1) Economics Dept., University of Nevada, Las Vegas, 4505 Maryland Parkway, Las Vegas, NV, 89154-6005;(2) Department of Agricultural Economics and Department of Recreation, Parks and Tourism Sciences, TAMU 2124, Texas A&M University, College Station, TX, 77843-6005 |
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| Abstract: | Few theoretically-consistent empirical models addressing the relationship between ambiguity, risk, and preferences for health
and safety exist. To fill this gap, we propose a theoretical non-expected-utility model (NEUM) that is relatively easy to
estimate using an interval-data model. The NEUM we develop hinges upon two sources of variability, one over risk and the other
over ambiguity about the risk.
Using data from a survey of Nevada residents concerning risks from nuclear-waste transport, we provide individual-specific
welfare estimate for a risk increase. Our findings suggest that negative externalities from nuclear-waste transport perceived
risks and ambiguity may be substantial.
JEL Codes D81 · D62 · Q53 · Q51 |
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| Keywords: | Expected utility Risk and uncertainty Ambiguity Nuclear-waste transport |
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