Economics Dictionary of ArgumentsHome
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| Risk perception: Risk perception refers to individuals' subjective assessment or judgment of the likelihood and severity of potential threats or hazards. It's influenced by cognitive, emotional, and social factors, impacting how people perceive and respond to risks, shaping their behaviors, decisions, and attitudes toward uncertain events or situations. See also Risks, Decisions, Behavioral economics._____________Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Lexicon of Arguments. | |||
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Gerrit De Geest on Risk Perception - Dictionary of Arguments
Parisi I 446 Risk/risk perception/incentives/carrots/sticks/Dari-Mattiacci/De Geest: Individuals might be risk-averse or risk-loving. Obviously, their reaction to probabilistic carrots and sticks changes. Yet, it is important to isolate the effect of risk-aversion from the confounding effects of increased wealth: carrots make individuals richer while sticks make them poorer, so that their behavior might change not only as a result of risk-bearing but also because of endowment effects. >Endowment effect. Risk aversion: risk-aversion makes individuals react more strongly to sticks than to carrots. (…) the probability of applying a stick needs to balance the individual’s utility when exerting effort with his utility when paying the stick, times an additional factor less Parisi I 447 than one, which is the ratio of the marginal disutilities of the stick and effort. This factor magnifies the effect of sticks (requires lower probabilities of monitoring). Sticks have a stronger incentive effect than carrots because compliance in the case of sticks is risk-free, while it implies risk in the case of carrots. The case of risk-loving individuals yields the opposite result. >Incentives/Dari-Mattiacci/De Geest. Giuseppe Dari-Mattiacci and Gerrit de Geest. “Carrots vs. Sticks”. In: Parisi, Francesco (ed) (2017). The Oxford Handbook of Law and Economics. Vol 1: Methodology and Concepts. NY: Oxford University._____________Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition. |
De Geest, Gerrit Parisi I Francesco Parisi (Ed) The Oxford Handbook of Law and Economics: Volume 1: Methodology and Concepts New York 2017 |
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