2017
DOI: 10.1007/s41885-017-0013-2
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Risk, Loss, and Ambiguity Aversion after a Natural Disaster

Abstract: We use survey and experimental methods to examine how residents' risk, loss, and ambiguity aversion are affected by a tornado event. We survey residents of the Oklahoma City area where a 2013 tornado resulted in massive damage and 24 fatalities. Our evaluation shows that risk aversion increased for those who were injured by the tornado. However, persons who lost a friend or neighbor were emboldened, experiencing reduced risk aversion. Ambiguity aversion increased for those who lost their residence or had prope… Show more

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Cited by 21 publications
(17 citation statements)
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“…We believe that military and firefighting experience are comparable in their effects on risk preferences. Our paper is also closely related to Shupp et al (2017) who find that risk aversion increased for people who were injured in the Oklahoma 150 tornado in 2013, but it decreased for those who saw the injuries of others. None of the experienced firefighters in our sample had been seriously injured.…”
supporting
confidence: 61%
See 1 more Smart Citation
“…We believe that military and firefighting experience are comparable in their effects on risk preferences. Our paper is also closely related to Shupp et al (2017) who find that risk aversion increased for people who were injured in the Oklahoma 150 tornado in 2013, but it decreased for those who saw the injuries of others. None of the experienced firefighters in our sample had been seriously injured.…”
supporting
confidence: 61%
“…Email addresses: krcalo@mail.muni.cz (Ondřej Krčál), rostanek@mail.muni.cz (Rostislav Staněk), slanicay@mail.muni.cz (Martin Slanicay) Bucciol and Zarri, 2013;Kim and Lee, 2014;Cameron and Shah, 2015;Hanaoka et al, 2016;Cassar et al, 2017;Shupp et al, 2017), if they live under specific conditions for a long period of time, for example if they live in disaster areas despite not having been directly affected by any disaster (Bchir and Willinger, 2013;Cassar et al, 2017;Shupp et al, 2017), if they have lower wealth or income (Guiso and Paiella, 2008;Tanaka et al, 2010), or if they have lived through an era of low stock market returns (Malmendier and Nagel, 2011;Ampudia and Ehrmann, 2017;20 Malmendier et al, 2011). The direction of the effect is not clear.…”
Section: Introductionmentioning
confidence: 99%
“…In order to assess risk-taking aptitudes during Covid-19 pandemic, we created a modified version of the Holt-Laury Paired Lottery Task [7] with hypothetical monetary payoff, a task wildly used to assess risk-related behaviours after catastrophic events, such as natural disasters [10]. In the original task, composed by 10 paired monetary lotteries presented on different decision rows, participants have to make a choice between Lottery A and Lottery B (Table 4).…”
Section: The Covid-19 Risk Taskmentioning
confidence: 99%
“…The literature about risk-taking attitude and behaviors in relation to life-threatening events indicates that first-person experience of extremely stressful events can change risk attitudes by either decreasing or increasing individual risk tolerance, namely making people have more risk-averse (Holt and Laury, 2002;Shupp et al, 2017;Jakiela and Ozier, 2018) or riskprone (Orri Stefánsson and Bradley, 2019;Galandra et al, 2020) attitudes. However, previous studies on this topic have often used tasks including hypothetical monetary stimuli (i.e., simulations of monetary rewards, opposed to real monetary stimuli which allow the subjects to gain or lose a real payoff) (Xu et al, 2016), preventing conclusions about real life contexts and decisions, as well as people's choices in relation to non-monetary outcomes.…”
Section: Introductionmentioning
confidence: 99%