Seminar
Tuesday, April 5, 2022, 11:15 am – 12:30 pm
Speaker
with Gary Becker, Yona Rubinstein, and Noam Yuchtman
Abstract:
We study the effect of fear on decision-making, focusing on the effect of terrorist attacks on the purchase of bus tickets and café expenditures, as well as on the effect of media coverage. We find that the response to attacks is concentrated in the purchases of single-ride tickets, which are less exposed to terrorism and exhibit less price elastic demand, compared to monthly bus ticket purchases. Frequent bus riders also respond less in consuming other terrorism-exposed goods, such as purchases in cafés, and vice versa. Our findings are consistent with a model in which fear is endogenous.