Citation

Viscusi WK, Evans WN. J. Risk Uncertain. 2006; 32(1): 5-15.

Affiliation

Harvard Law Sch, Cambridge, MA 02138 USA. Univ Maryland, College Pk, MD 20742 USA.

Copyright

(Copyright © 2006, Holtzbrinck Springer Nature Publishing Group)

DOI

unavailable

PMID

unavailable

Abstract

This article introduces the concept of behavioral probabilities, along with an econometric procedure for jointly estimating these probabilities as well as individual utility functions. Behavioral probabilities that guide decisions differ from posterior probabilities that are reported after receiving risk information. The underlying process that generates behavioral probabilities reflects a behavioral anomaly as the new risk information takes on an excessive role. While utility function estimates are consistent with theoretical predictions, considering behavioral probabilities alters their implications.