Does Good News Wash out the Bad? Belief Updating and Climate Risk Information

Last registered on February 19, 2025
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Pre-Trial

Trial Information

General Information

Title
Does Good News Wash out the Bad? Belief Updating and Climate Risk Information
RCT ID
AEARCTR-0015373
Initial registration date
February 12, 2025

Initial registration date is when the trial was registered.

It corresponds to when the registration was submitted to the Registry to be reviewed for publication.

First published
February 19, 2025, 8:45 AM EST

First published corresponds to when the trial was first made public on the Registry after being reviewed.

Locations

Country
United States of America
Region

Primary Investigator

Name
Philip Mulder
Affiliation
University Of Wisconsin - Madison
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Other Primary Investigator(s)

PI Name
Lynn Conell-Price
PI Affiliation
Consumer Financial Protection Bureau
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Additional Trial Information

Status
Completed
Start date
2021-03-25
End date
2021-05-09
Keywords
Behavior, Environment & Energy, Firms & Productivity
Additional Keywords
Flood risk, insurance, information provision
JEL code(s)
Q54, G52, C93, D83
Secondary IDs
Prior work
This trial does not extend or rely on any prior RCTs.
Abstract
While property owners around the world have access to an increasing array of information about climate risks, it is unclear how such information affects their beliefs and participation in disaster insurance markets. This paper shows results from the first field experiment providing detailed, property-level flood risk information to U.S. homeowners. Our experimental design compares changes in risk beliefs and implied insurance demand between a treatment group who received individualized flood risk information from the First Street Foundation Flood Model, and control arms who received no individualized information. Our results show that while homeowners who overestimated their risk relative to the model revised their beliefs downward in response to information, homeowners who underestimated their risk showed little updating. Although underestimating participants are more confident about their pre-treatment risk beliefs, we do not find evidence that these results are driven by differences in private information or adaptation. These findings imply economically significant changes in flood insurance demand, reducing predicted voluntary take-up by more than five percentage points among homeowners at lower risk and increasing adverse selection.
External Link(s)

Registration Citation

Citation
Conell-Price, Lynn and Philip Mulder. 2025. "Does Good News Wash out the Bad? Belief Updating and Climate Risk Information." AEA RCT Registry. February 19. https://doi.org/10.1257/rct.15373-1.0
Sponsors & Partners

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Experimental Details

Interventions

Intervention(s)
Intervention (Hidden)
Intervention Start Date
2021-03-25
Intervention End Date
2021-05-09

Primary Outcomes

Primary Outcomes (end points)
Flood risk beliefs across six measures, voluntary flood insurance demand
Primary Outcomes (explanation)
Voluntary flood insurance demand is estimated from flood risk beliefs using surrogate index method

Secondary Outcomes

Secondary Outcomes (end points)
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
After completing the initial survey section, participants proceeded to a section implementing the information provision experiment by randomly assigning participants to one of three variants of the survey flow. The first, "Control - No Information" condition skipped this block entirely and proceeded to follow-up questions. The second, “Control – Generic Information” treatment, did not provide any participant-specific risk information and simply displayed a headline reading “Your Flood Risk Summary” above an accurate but generic message indicating that “your property has a chance of flooding each year” and that any such flooding "can cause significant damage". Finally, the third, “Individualized Risk Information” Treatment displayed the same headline as the Control - Generic Information arm along with a detailed flood risk assessment specific to the respondent’s property. This information treatment directly embedded and displayed the respondent’s property-specific FloodFactor Flood Risk Assessment based on the First Street Foundation Flood Model (FSF-FM) and made freely available on the FSF website at the time. To ensure engagement with the additional information, this screen also prevented respondents from proceeding to the next page for at least 20 seconds.
Experimental Design Details
Randomization Method
Random number generator in Qualtrics
Randomization Unit
Individual
Was the treatment clustered?
No

Experiment Characteristics

Sample size: planned number of clusters
884 Individuals
Sample size: planned number of observations
884 Individuals
Sample size (or number of clusters) by treatment arms
227 - no information control group
243 - generic information control group
414 - individualized information treatment group
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
Supporting Documents and Materials
IRB

Institutional Review Boards (IRBs)

IRB Name
University of Pennsylvania Institutional Review Board
IRB Approval Date
2020-11-02
IRB Approval Number
844316
Analysis Plan

Post-Trial

Post Trial Information

Study Withdrawal

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Intervention

Is the intervention completed?
No
Data Collection Complete
Data Publication

Data Publication

Is public data available?
No

Program Files

Program Files
Reports, Papers & Other Materials

Relevant Paper(s)

Reports & Other Materials