Confusion of Relative and Absolute Risk in Valuation

@inproceedings{Baron1997ConfusionOR,
  title={Confusion of Relative and Absolute Risk in Valuation},
  author={Jonathan Baron},
  year={1997}
}
Subjects were less willing to pay for government medical insurance for diseases when the number of people who could not be cured was higher, holding constant the number who could be cured. In a second experiment, willingness to pay (from a hypothetical government windfall) for risk reduction was unaffected by whether the risk was described in terms of percentage or number of lives saved, even though subjects knew that the risks in question differed in prevalence. These results are consistent… CONTINUE READING
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