Title: Variation in risk seeking behaviour following large losses: A natural experiment
Abstract: This study explores people׳s risk taking behaviour after having suffered large real-world losses following a natural disaster. Using the margins of the 2011 Australian floods (Brisbane) as a natural experimental setting, we find that homeowners who were victims of the floods and face large losses in property values are 50% more likely to opt for a risky gamble – a scratch card giving a small chance of a large gain ($500,000) – than for a sure amount of comparable value ($10). This finding is consistent with prospect theory predictions regarding the adoption of a risk-seeking attitude after a loss.
Publication Year: 2014
Publication Date: 2014-10-01
Language: en
Type: article
Indexed In: ['crossref']
Access and Citation
Cited By Count: 154
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