Zero risk bias and improbable risk

Zero Risk Bias and Savings and Financial Decisions
Intervention Savings and Financial Decisions

How people value elimination of risks

Intervention Description

The authors examine risk preferences through prices for a pesticide. They present groups the scenario of a $10 pesticide that rarely produces a toxic reaction. When asked how much they would pay for a similar pesticide that reduced the risk to even less, people were willing to pay a significant amount considering the cost of the pesticide. This finding displays that even when the change in risk is negligible, people overvalue the elimination of risk.