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Behavioral Probabilities

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Abstract

This article introduces the concept of behavioral probabilities, along with an econometric procedure for jointly estimating these probabilities as well as individual utility functions. Behavioral probabilities that guide decisions differ from posterior probabilities that are reported after receiving risk information. The underlying process that generates behavioral probabilities reflects a behavioral anomaly as the new risk information takes on an excessive role. While utility function estimates are consistent with theoretical predictions, considering behavioral probabilities alters their implications.

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Authors and Affiliations

  1. Cogan Professor of Law and Economics, Harvard Law School, 1575 Massachusetts Avenue, Cambridge, MA, 02138

    W. Kip Viscusi

  2. University of Maryland, Maryland

    William N. Evans

Authors
  1. W. Kip Viscusi
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  2. William N. Evans
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Corresponding author

Correspondence to W. Kip Viscusi.

Additional information

Viscusi's research is supported by the Olin Center for Law, Business, and Economics.

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Viscusi, W.K., Evans, W.N. Behavioral Probabilities. J Risk Uncertainty 32, 5–15 (2006). https://doi.org/10.1007/s10797-006-6663-6

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  • DOI: https://doi.org/10.1007/s10797-006-6663-6

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