The Hedonics of Hedonism – Estimating the Value of Risk-Taking Activities

Published in Kyklos, 2009

This paper estimates the individual willingness to pay (WTP) for the option to exercise risk-taking. We use data of 69 Austrian Ski resorts and 3,637 reported ski accidents and apply the hedonic market method. Our results suggest that the individual WTP for a hypothetical increase in the possibility to undertake risk-taking activities lies between 11% and 25% of the price of a ski-lift-ticket. Monetized values help design pricing schemes that set incentives to reduce risk-taking behavior as well as to develop alternative instruments to reduce the adverse effects of risk-taking activities (e.g. accidents).