Top publication by Aysil Emirmahmutoglu

15 December 2020 11:32

Top publication by Aysil Emirmahmutoglu

The article "When Risk Perception Gets in the Way: Probability Weighting and Underprevention" has been published in Operations Research.

Operations Research is included on the NHH Bonus list and on the Financial Times Research Rank List, and it is also on level 4* in the ABS Academic Journal Guide.

Ballion, Aurélien, Han Bleichrodt, Aysil Emirmahmutoglu, Johannes Jaspersen and Richard Peter: When Risk Perception Gets in the Way: Probability Weighting and Underprevention, Operations Research, Online 06.07.2020.

Abstract

Personal decisions about health hazards are the main cause of impaired health and premature death. People smoke and eat too much, and they exercise too little. The lack of preventive efforts is surprising given their proven effectiveness. In the early 1960s, Arrow suggested that moral hazard might be a reason for underprevention, but this explanation was later challenged.

In this paper, we show that underprevention might be caused by misperceived probabilities. We derive when and how probability weighting gets in the way of prevention by blurring its benefits. We use a general model of prevention, encompassing several special cases from the literature. We also show how perceived ambiguity makes the problem of underprevention even worse by amplifying the effect of probability weighting.