Organization: Wharton Risk Management and Decision Process Center, The Wharton School, University of Pennsylvania
- Dr. Howard Kunreuther, Co-Director
Building on 30 years of experience in risk perception and behavioral economics, this session explores how we make choices in the context of low-probability/high-consequence events. We make decisions differently in this uncertain disaster environment than we do in our day-to-day activities. For example, we often fail to invest in protective measures, until after catastrophic losses occur, as a result of relying on oversimplified decision rules and misperceiving the risk. We will explore these behavioral biases and ways to overcome them – in the spirit of Nobel Laureate Daniel Kahneman’s intuitive (thinking fast) and deliberative (thinking slow) approaches – by proposing strategies that encourage long-term thinking balanced with short-term considerations. The panel will also discuss with the audience a check-list that can be applied to individual decision making, actions taken by firms, NGOs, and government entities in developed and developing countries alike.