EconPapers    
Economics at your fingertips  
 

Learning from extreme catastrophes

Shinichi Kamiya () and Noriyoshi Yanase ()
Additional contact information
Shinichi Kamiya: Nanyang Technological University
Noriyoshi Yanase: Keio University

Journal of Risk and Uncertainty, 2019, vol. 59, issue 1, 85-124

Abstract: Abstract This article studies the effects of direct and indirect loss experience of extreme catastrophes on expectations concerning the likelihood of future events by investigating the earthquake insurance take-up of Japanese households after the two costliest disasters in history. Direct loss experiences caused the strongest reactions to extreme catastrophes, whereas risk belief updates were a nationwide phenomenon. Sharing personalized information contributed to strong and persistent indirect experience effects. Investigating the effect of past quake experience on reaction to a new major quake, we find that both availability bias and representativeness help explain the effect of past loss experiences. Furthermore, the gambler’s fallacy, as proposed by Tversky and Kahneman (Psychological Bulletin 76(2), 105–110, 1971), appears to play an important role after an indirect experience with a 1000-year earthquake.

Keywords: Catastrophe; Earthquake; Insurance; Risk belief; Availability bias; Representativeness; Peer effects; D12; D81; D83; G2 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://link.springer.com/10.1007/s11166-019-09310-8 Abstract (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kap:jrisku:v:59:y:2019:i:1:d:10.1007_s11166-019-09310-8

Ordering information: This journal article can be ordered from
http://www.springer. ... ry/journal/11166/PS2

Access Statistics for this article

Journal of Risk and Uncertainty is currently edited by W. Kip Viscusi

More articles in Journal of Risk and Uncertainty from Springer
Bibliographic data for series maintained by Sonal Shukla ().

 
Page updated 2019-11-24
Handle: RePEc:kap:jrisku:v:59:y:2019:i:1:d:10.1007_s11166-019-09310-8