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A theoretically-consistent empirical model of non-expected utility: An application to nuclear-waste transport

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  • Mary Riddel
  • W. Shaw

Abstract

Few theoretically-consistent empirical models addressing the relationship between ambiguity, risk, and preferences for health and safety exist. To fill this gap, we propose a theoretical non-expected-utility model (NEUM) that is relatively easy to estimate using an interval-data model. The NEUM we develop hinges upon two sources of variability, one over risk and the other over ambiguity about the risk. Using data from a survey of Nevada residents concerning risks from nuclear-waste transport, we provide individual-specific welfare estimate for a risk increase. Our findings suggest that negative externalities from nuclear-waste transport perceived risks and ambiguity may be substantial. Copyright Springer Science + Business Media, LLC 2006

Suggested Citation

  • Mary Riddel & W. Shaw, 2006. "A theoretically-consistent empirical model of non-expected utility: An application to nuclear-waste transport," Journal of Risk and Uncertainty, Springer, vol. 32(2), pages 131-150, March.
    • Handle: RePEc:kap:jrisku:v:32:y:2006:i:2:p:131-150
    DOI: 10.1007/s11166-006-8290-0
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