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.
Other Applications: Savings and Financial Decisions