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The Denominator Blindness Effect: Accident Frequencies and the Misjudgment of Recklessness

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  • W. Kip Viscusi
  • Richard J. Zeckhauser

Abstract

People seriously misjudge accident risks because they routinely neglect relevant information about exposure. Such risk judgments affect both personal and public policy decisions (e.g., choice of a transport mode) but also play a vital role in legal determinations, such as assessments of recklessness. Experimental evidence for a sample of 422 jury-eligible adults indicates that people incorporate information on the number of accidents, which is the numerator of the risk frequency calculation. However, they appear blind to information on exposure, such as the scale of a firm's operations, which is the risk frequency denominator. Hence, the actual observed accident frequency of accidents/exposure is not influential. Copyright 2004, Oxford University Press.

Suggested Citation

  • W. Kip Viscusi & Richard J. Zeckhauser, 2004. "The Denominator Blindness Effect: Accident Frequencies and the Misjudgment of Recklessness," American Law and Economics Review, American Law and Economics Association, vol. 6(1), pages 72-94.
    • Handle: RePEc:oup:amlawe:v:6:y:2004:i:1:p:72-94
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    Cited by:

    1. W. Viscusi & Joel Huber & Jason Bell, 2012. "Heterogeneity in Values of Morbidity Risks from Drinking Water," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 52(1), pages 23-48, May.
    2. Baruch Fischhoff & Scott Atran & Noam Fischhoff, 2007. "Counting casualties: A framework for respectful, useful records," Journal of Risk and Uncertainty, Springer, vol. 34(1), pages 1-19, February.

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