caa a22 4500 469075902 CHVBK 20180323132935.0 cr unu---uuuuu 170328e19921201xx s 000 0 eng 10.1007/BF00134925 doi (NATIONALLICENCE)springer-10.1007/BF00134925 Should earthquake mitigation measures be voluntary or required? [Elektronische Daten] [Howard Kunreuther, Anne Kleffner] This paper examines whether or not one should require homeowners to adopt cost-effective loss reduction measures (LRMs) on residential structures in earthquake prone areas. Congress is considering requiring homeowners in earthquake-prone areas to purchase earthquake insurance as a condition for a federally insured mortgage but is still debating what action should be taken regarding mitigation. We show that the incentive to voluntarily adopt LRMs is reduced if homeowners are covered by full insurance rather than being uninsured. This result holds even if individuals have accurate information on the risk and maximize expected utility. The empirical evidence indicates that few homeowners adopt mitigation measures whether they are insured or uninsured. Most individuals do not behave as if they maximize expected utility and instead seem to employ simplified decision rules which suggest that mitigation measures are unnecessary or too costly in relation to the perceived benefits. These findings suggest that it may be necessary to strengthen building codes and/or require the adoption of mitigation measures on existing structures in return for reduced earthquake insurance premiums. Kluwer Academic Publishers, 1992 Kunreuther Howard Department of Decision Sciences and Insurance, Center For Risk and Decision Processes, Wharton School, University of Pennsylvania, 3620 Locust Walk, 19104, Philadelphia, PA, USA aut Kleffner Anne Department of Decision Sciences and Insurance, Center For Risk and Decision Processes, Wharton School, University of Pennsylvania, 3620 Locust Walk, 19104, Philadelphia, PA, USA aut Journal of Regulatory Economics Kluwer Academic Publishers 4/4(1992-12-01), 321-333 0922-680X 4:4<321 1992 4 11149 https://doi.org/10.1007/BF00134925 text/html Onlinezugriff via DOI 1 research-article jats NATIONALLICENCE 856 40 https://doi.org/10.1007/BF00134925 text/html Onlinezugriff via DOI NATIONALLICENCE 700 1- Kunreuther Howard Department of Decision Sciences and Insurance, Center For Risk and Decision Processes, Wharton School, University of Pennsylvania, 3620 Locust Walk, 19104, Philadelphia, PA, USA aut NATIONALLICENCE 700 1- Kleffner Anne Department of Decision Sciences and Insurance, Center For Risk and Decision Processes, Wharton School, University of Pennsylvania, 3620 Locust Walk, 19104, Philadelphia, PA, USA aut NATIONALLICENCE 773 0- Journal of Regulatory Economics Kluwer Academic Publishers 4/4(1992-12-01), 321-333 0922-680X 4:4<321 1992 4 11149 Metadata rights reserved Springer special CC-BY-NC licence nationallicence BK010053 XK010053 XK010000 NATIONALLICENCE NATIONALLICENCE NL-springer