A Test of the Expected Utility Model: Evidence from Earthquake Risks

David S. Brookshire; Mark A. Thayer; John Tschirhart; William D. Schulze

doi:10.1086/261304

A Test of the Expected Utility Model: Evidence from Earthquake Risks

David S. Brookshire; Mark A. Thayer; John Tschirhart; William D. Schulze

Journal of Political Economy 1985 open access

The purposes of this paper are twofold. The first is to demonstrate that the expected utility hypothesis is a reasonable description of behavior for consumers who face a low-probability, high-loss natural hazard event, given that they have adequate information. The second is to demonstrate that in California information non earthquake hazards was generated by a 1974 state law that created a market for safe housing that previously did not exist.

DOI: 10.1086/261304
Volume: 93 (2)
Pages: 369-389
Language: en
Export: BibTeX
Sources: crossref openalex