Risk

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Risk
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What do we mean by risk?

• Pure risk
• Speculative risk

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What do we mean by risk?

• Reasonable risks
• Unreasonable risks

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What to do about risks?
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Risk Benefit Analysis

• Risk-benefit ratio
• the expected loss from using the product or
  performing the activity divided by the expected
  benefit
• Expected loss probability of a loss occurring
  multiplied by the severity of the loss

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Problems with Regulation/Causes of problems

• Problems with Regulation
• Tunnel Vision
• Random Agenda Selection
• Inconsistency
• Causes of Regulation Problems
• Public perception
• Congressional Actions and Reactions
• Technical Regulatory methods

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Perceived Risks

• Which is a higher risk?
• riding in a airplane
• riding in your own car

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Perceived Risks Research of Peter Sandman

• Risk Magnitude X Probability
• public view of risk is quite different

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Perceived Risks Research of Peter Sandman

• public view of risk is
• Risk hazard outrage

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Sandmans Eleven Components of outrage

• Voluntary Vs. Coerced hazards
• Natural Vs. Technological hazards
• Familiar Vs. Exotic hazards
• Unmemorable Vs. Memorable hazards

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Sandmans Eleven Components of outrage

• Not dreaded Vs. Dreaded hazards
• Knowable Vs. Unknowable Hazards
• Control by the individual Vs. Control by others
• Fair Vs. Unfair hazards

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Sandmans Eleven Components of outrage

• Moral irrelevance Vs. Moral relevance
• High trust Vs. Low trust
• Good process Vs. Poor process
• Plus we can add another one Diffuse in
  Time/Space Vs. Focused in time/space

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Precaution Adoption Process

• Neil Weinstein (Health Psyhcology, 1988, 7(4),
  355-386)

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Weinsteins five stages

• consumer learns or hears about the existence of
  the hazard
• believes in significant likelihood for others
• acknowledges personal susceptibility
• intention to act
• takes self-protection behavior

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What is Biotechnology?

• The application of the molecular biology
  techniques to identify genes responsible for
  particular traits to clone, study, characterize,
  and manipulate them and finally, to insert them
  into different organisms
• The use of living organisms to make or modify
  products for human use
• Allows us to CREATE living cellular matter that
  never before existed

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What is rBST and what is its purpose?

• Bovine Growth Hormone
• chemically engineered protein hormone which
  stimulates milk production abilities by 10-25

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What are the major concerns and issues
surrounding use of biotechnology, in general, and
rBST specifically?
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Applying Theories Neoclassical

• Demand f(price, income, price of other goods,
  taste and preferences, population)
• Price
• Taste Shifters

P
S
D
Q
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Applying TheoriesLancaster

• Characteristics
• Will rBST confer additional utility?

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Applying TheoriesPerceived Risk

• What factors may affect consumers perception of
  risk?
• What would you hypothesize in general about
  perceived risk and consumer demand?
• When might consumers be willing to accept more
  perceived risk?

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Applying TheoriesSelf-Protection Process

• Learn of hazard
• Likelihood for others present or future
• Personal susceptibility
• No self-protective action
• Self-protection response