Abstract

How should marketers communicate risk information? In discussing this question, I start with basic economic theory and expected-utility (EU) theory. Then I discuss the limitations resulting from misestimation of probability, the need to deal with many risks at once, and the existence of individual differences in risk preference. I then review the problem of cognitive biases such as the tendency to favor harms of omission over harms of direct action. I conclude with suggestions about the design of risk communication that take these factors into account. “Do not use in shower. ” — On a hair dryer. (From

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