Housing prices and flood risk: An examination using spline regression

This article examines the impact of flood risk and mandatory flood insurance on property values. Using a large data set of almost 2,000 homes sold in the New Orleans, Louisiana, area from 1971 through 1986, the analysis confirms the finding of earlier studies that location in a floodplain does reduce property values. The present study, using spline variables to adjust for locational variation in the data and an improved measure of insurance cost, reveals that much of this reduction can be attributed to mandatory flood insurance coverage. Moreover, while unexpected flooding does increase the insurance cost capitalization, repeated flooding does not seem to reduce property values further.     

Respect for experience and organisational ability to operate in complex and safety critical environments

The role of experience has been shown to be critical for risk management. Yet, few studies have conceptualised and explained the organisational processes that determine how experience informs risk management. We present a case study examining how experience informs the risk-based decisions of employees in a safety critical industry. Data were gathered through 28 semi-structured interviews in a power utility. Experience contributed significantly to risk-based decisions, particularly those involving complex or dynamic risks, across all functional and hierarchical divisions. Further, collective experience between organisational divisions and a widespread respect for experience promoted the sharing of experiential knowledge. This deepened the extent to which experience was incorporated into risk-based decisions and facilitated coordination between operational and strategic risk management. Respect for experience and collective experience are important contributors to organisational ability for adaptive and coordinated behaviour in complex and high risk environments.     

Consumers’ collision insurance decisions: a mental models approach to theory evaluation

Using interviews with 74 drivers, we elicit and analyze how people think about collision insurance coverage and decide whether to buy coverage, and if so, what deductible level to carry. We compare respondents’ judgments and behaviors to predictions of three models: baseline expected utility (EU) theory, which predicts that insurance is an inferior good, meaning more wealthy people buy less; a modified EU model, which incorporates income constraints and suggests that property insurance is a normal good, meaning more wealthy people buy more; and a mental accounting model which predicts that consumers budget income across consumption categories. The results suggest they purchase insurance as a normal good, guided by a cognitive model that emphasizes budget constraints. Verbal reports reveal a desire to balance two conflicting goals in deductible decisions: keeping premiums ‘affordable’ and keeping deductible level ‘affordable.’ Thus, wealth does not distinguish people by risk aversion, but by ability to pay. In other words, the behavior of less wealthy people is not driven by greater risk aversion, but by their lesser ability to pay, both now and later. We find that a simple heuristic using only vehicle value accounts for most decisions of whether to purchase optional collision coverage: out of 45 respondents who did not have loans on their vehicles, 90% of those with vehicles worth more than $1000 carried collision coverage, while less than 30% of those with lower‐valued vehicles did.     

不完全信息下的供应链风险评估方法研究

本文使用多属性决策方法进行供应链风险评估,在风险属性权重信息不完全的情况下,建立非线性规划模型求得各风险属性的权重值,并通过求与理想解之间的加权欧氏距离来评估风险值的大小,解决了评估专家由于知识、经验和偏好不完全相同而意见难以统一的困难,最后用一个例子说明了该方法的有效性和实用性。     

The role of perceived costs and perceived benefits in the relationship between personality and risk‐related choices

This paper considers how perceptions of costs and benefits can influence the association between personality and risky choice behaviour. We assessed perceptions and behaviours in six domains (ethical; investment; gambling; health and safety; recreational; social) using the DOSPERT and measured personality using the NEO PI‐R. Results from structural equation modelling showed that personality had a direct effect on risky choice behaviour in four domains (social, ethical, gambling and recreational risk‐taking). In addition, perceived costs and benefits mediated the relations between personality and risk‐taking in the five domains (social, ethical, gambling, recreational and investment risk‐taking). Evidence for a mechanism that integrates both direct and indirect effects of personality on behaviour is discussed.     

Risk aversion vs. individualism: what drives risk taking in household finance?

Despite a considerable premium on equity with respect to risk-free assets, many households do not own stocks. We ask why the prevalence of stockholding is so limited. We focus on individuals’ attitudes toward risk and identify relevant factors that affect the willingness to take financial risks. Our empirical evidence contradicts standard portfolio theory, as it does not indicate a significant relationship between risk aversion and financial risk taking. However, our analysis supports the behavioral view that psychological factors rooted in national culture affect portfolio choice. Individualism, which is linked to overconfidence and overoptimism, has a significantly positive effect on financial risk taking. In microdata from Germany and Singapore, as well as in cross-country data, we find evidence consistent with low levels of individualism being an important factor in explaining the limited participation puzzle.     

Genetic testing: affected parties and decision making

The network of issues around information obtained from genetic testing is wide and complex. While risk assessment, awareness and discussion are often public driven, and in many instances, including that of nuclear power, are allied with democratic principles, the case of gene technology and genetic testing appears to be different. The opportunity for risk assessment by gene testing is rejected by many, and this rejection is supported by the claim of the right not to know. This article discusses the background to this development, and argues that decisions that consider issues related to genetic testing should be taken with the participation of affected parties.     

Global 2000: Radar for the ship of state

The way the US Global 2000 report has (and, especially, has not) been reacted to and publicly debated illustrates many fundamental problems in developing workable and efficient radar for the ship of state. The text and footnotes draw attention to eg conflicting assumptions in different agencies, or the superficial but unchallenged criticisms of analyses by senior government officials. Many important principles are not even addressed.     

Global modelling revisited

Reasons for the great impact of World Dynamics and Limits to Growth include their addressing the correct audience (the public), and the ability of systems dynamics clearly to handle and communicate information on complex and often little understood areas. Modelling projects should usually be global or national (not regional), draw heavily on mental and not just written and numerical databases, and have time horizons of perhaps 100 years. Sadly, critics of Worlds 2 and 3 have yet to come to grips with the fundamental messages presented there, although these messages are becoming increasingly vital.