Risk-Taking Behavior in the Wake of Natural Disasters

• Autores: Lisa Ann Cameron, Manisha. Shah
• Localización: Journal of human resources, ISSN 0022-166X, Vol. 50, Nº 2, 2015, págs. 484-515
• Idioma: inglés
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• Resumen

  • abstract: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.