Stability of risk and uncertainty preferences in tourism

Abstract

This paper provides a novel longitudinal analysis of the stability of risk preferences in the travel domain, and how these are impacted by major life events during a crisis. Analysis of a four-wave survey during COVID-19 demonstrates strong inter-temporal stability of most risk preferences. It also reveals greater stability of generic risk traits and risk and uncertainty tolerance in travel compared to situational risk preferences. An innovative difference-in-differences with multiple time periods analysis is undertaken to examine the oscillating risk preferences of individuals hit hard financially by the pandemic. It reveals they become more tolerant of situational risk and uncertainty over time. Learning that the negative consequences of the pandemic are negotiable plays a key role in changing risk preferences.