Paper Abstract
387. W. Kip Viscusi and Richard J. Zeckhauser, The Denominator Blindness Effect: Accident Frequencies and the Misjudgment of Recklessness, 10/2002; subsequently published in American Law & Economics Review, Vol. 6, No. 1, 2004, 72-94.
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.