Ozlem Ozdemir

Factors affecting risk mitigation revisited: the case of earthquake in Turkey

This paper investigates the effects of earthquake risk perceptions and a number of socioeconomic variables on risk mitigation. The effects of perceived risk components (probability and severity) and perceived risk characteristics (dread, knowledge, controllability, and responsibility) are investigated jointly in a single model, together with degree of risk aversion and socioeconomic factors (income, gender, age, education, and number of children). Analyses are conducted separately in order to explain variability in five different forms of mitigation behaviors: (1) purchasing of compulsory earthquake insurance, (2) past mitigation behaviors, (3) monetary value of past mitigation behaviors, (4) intentions for future mitigation behaviors, and (5) monetary value of intended future mitigation behaviors. Data are obtained from homeowners in Istanbul, where a major earthquake is expected within 30 years. The results provide evidence that all three variable sets (risk components, risk characteristics, and socioeconomic variables) may act as significant determinants of mitigation and that the driving factors for mitigation may differ across forms of mitigation behaviors investigated. The study (1) provides partial explanation for the equivocal findings in prior research regarding the relationship between risk perceptions and mitigation behaviors, and (2) offers guidelines for policy‐makers in motivating communal earthquake risk mitigation.

Market Forces and Price Ceilings: A Classroom Experiment

The effect of price controls on competitive equilibrium is a standard topic in many undergraduate economics courses. This classroom experiment demonstrates the effect of rent control (price ceilings) on the market for apartments. As participants in the experiment, students experience the effect of a price ceiling as buyers (renters) and sellers (landlords). The classroom-posted offer market exhibits a shortage under a binding price ceiling. Further, we explore a secondary response to rent control. When given the opportunity, landlords lower the quality of the apartments by reducing maintenance expenditures under the price ceiling, thus moving the market back to equilibrium. Since many students are themselves renters, they should relate to changes in quality due to lower maintenance by landlords. This experiment will stimulate discussion on market forces and on public policy aimed at restricting prices.

IMPACT OF OUTCOME AMBIGUITY ON SELF-INSURANCE AND SELF-PROTECTION: EXPERIMENTAL EVIDENCE

This experimental study examines and compares individual valuations of the two risk reduction mechanisms: self‐insurance and self‐protection in risky versus ambiguous outcome situations. Results confirm that individuals do not perceive these mechanisms differently under risk. Moreover, ambiguity in the outcome (i.e., size of loss) affects valuations weakly, and changing representations of ambiguity do not alter valuation. In general, individuals are found to be ambiguity averse for low sizes of loss and ambiguity neutral for high sizes of loss, regardless of the probability of loss. Finally, no strong support is found for any particular model of ambiguity.

Olasılığı düşük risklerin yönetimi ve risk algısı: Deprem riski üzerine bir saha araştırması

Iktisat alanindaki calismalar deprem gibi olusma olasiligi az ama oldugunda zararin cok yuksek oldugu risklere karsi bireylerin davranislarini aciklamakta yetersiz kalmistir. Bu calismanin amaci hane halkinin farkli risk bolgelerinde depremi nasil bir risk olarak algiladigini ortaya cikarmak, deprem sonucu olusan zararlari azaltici onlemlerin ne kadarini aldiklarini ve almaya razi olduklarini belirlemektir. Bu amacla veriler, Istanbul ilinde ve uc farkli risk bolgesini kapsayacak sekilde 941 hane halki temsilcisinden toplanmistir. Sonuclara gore degisik risk bolgeleri arasinda risk algisi acisindan onemli farkliliklar bulunmaktadir. Genel olarak, ileride alinmasi dusunulen deprem riskini azaltici tedbirlerin parasal degeriyle anlamli iliskisi olan degiskenler (1) konut degeri, (2) hane geliri ve (3) oturulan bolgenin algilanan deprem riski olarak belirlenmistir. Onceden alinmis tedbirlerin parasal degerini artiran faktorler ise (1) cocuk sayisi ve (2) kisinin kendisine atfettigi sorumluluk derecesi olarak belirlenmistir. Deprem riski yonetimi stratejileri acisindan kamu otoritesinin farkli risk bolgelerine degisik yaklasimlar gelistirmesi ve halki sorumluluk algisi acisindan bilgilendirmesi gerekmektedir.