| Summary: | It has been argued
that individuals behave according to a threshold level of concern decision rule
when considering protection against risk: if the perceived probability of the
risk is below a threshold level, then the likelihood of the risk is treated as
zero and protection is deemed unnecessary. Little is known about the
determinants of this threshold nor about whether individual thresholds are
related to risk specific emotions like worry and regret. We study threshold
probabilities and factors that influence these in the context of flood
insurance decision making. Based on data collected from 1,041 Dutch homeowners,
we find that on average the threshold level of concern for flood insurance
demand is negatively related to the expected regret an individual might feel
about not purchasing flood insurance if a flood occurs, as well as to worry
about flooding.
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