News Column

Findings from Georgia State University Update Knowledge of Risk Management

February 21, 2014



By a News Reporter-Staff News Editor at Insurance Weekly News -- Investigators publish new report on Risk Management. According to news reporting originating in Atlanta, Georgia, by VerticalNews journalists, research stated, "We examine the subjective risks of driving behavior using a controlled virtual reality experiment. Use of a driving simulator allows us to observe choices over risky alternatives that are presented to the individual in a naturalistic manner, with many of the cues one would find in the field."

The news reporters obtained a quote from the research from Georgia State University, "However, the use of a simulator allows us the type of controls one expects from a laboratory environment. The subject was tasked with making a left-hand turn into incoming traffic, and the experimenter controlled the headways of oncoming traffic. Subjects were rewarded for making a successful turn, and lost income if they crashed. The experimental design provided opportunities for subjects to develop subjective beliefs about when it would be safe to turn, and it also elicited their attitudes towards risk. A simple structural model explains behavior, and showed evidence of heterogeneity in both the subjective beliefs that subjects formed and their risk attitudes. We find that subjective beliefs change with experience in the task and the driver's skill. A significant difference was observed in the perceived probability to successfully turn among the inexperienced drivers who did and did not crash even though there was no significant difference in drivers' risk attitudes among the two groups. We use experimental economics to design controlled, incentive compatible tasks that provide an opportunity to evaluate the impact on driver safety of subject's subjective beliefs about when it would be safe to turn as well as their attitudes towards risk."

According to the news reporters, the research concluded: "This method could be used to help insurance companies determine risk premia associated with risk attitudes or beliefs of crashing, to better incentivize safe driving."

For more information on this research see: Estimating the subjective risks of driving simulator accidents. Accident Analysis and Prevention, 2014;62():63-78. Accident Analysis and Prevention can be contacted at: Pergamon-Elsevier Science Ltd, The Boulevard, Langford Lane, Kidlington, Oxford OX5 1GB, England. (Elsevier - www.elsevier.com; Accident Analysis and Prevention - www.elsevier.com/wps/product/cws_home/336)

Our news correspondents report that additional information may be obtained by contacting V. Dixit, Georgia State University, Andrew Young Sch Policy Studies, Dept. of Econ, Atlanta, GA 30303, United States. Additional authors for this research include G.W. Harrison and E.E. Rutstrom.

Keywords for this news article include: Atlanta, Georgia, United States, Risk Management, North and Central America

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Source: Insurance Weekly News


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