Evolution of Subjective Hurricane Risk Perceptions: A Bayesian Approach

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David Kelly; David Letson; Forest Nelson; David S. Nolan; Daniel Solis;
(2009)
  • Subject: risk perceptions, learning, Bayesian learning, event markets, prediction markets, favorite-longshot bias, hurricanes
    • jel: jel:C53 | jel:G14 | jel:D83 | jel:C9

This paper studies how individuals update subjective risk perceptions in response to hurricane track forecast information, using a unique data set from an event market, the Hurricane Futures Market (HFM). We derive a theoretical Bayesian framework which predicts how tra... View more
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