Reasoning about extreme events: A review of behavioural biases in relation to catastrophe risks

The present report outlines behavioural biases studied in the literature in relation to the way people reason

about and respond to catastrophe risks. The project is led by the Lighthill Risk Network, in collaboration with a

team of social and behavioural researchers from the University of Kent.

The aim of this report is to increase awareness of selected behavioural risks, and to highlight ways how biases

can affect insurance purchases and underwriting decisions. The report focuses on catastrophe risk as a priority

area for the insurance industry, and because catastrophe risks have been more widely studied in the literature

than other types of risk.