Days of haze: Environmental information disclosure and intertemporal avoidance behavior

In this paper, we investigate the dynamics of informational regulatory approaches by analyzing the impact of smog alerts issued on consecutive days on discretionary outdoor activities in Southern California. Short-run adjustments to transitory risk entail costs that are likely to influence the set of evasive actions pursued by those at risk. Our results confirm that the cost of intertemporally substituting activities is increasing over time: when alerts are issued on 2 successive days, any response on the first day has largely disappeared by the second day. Small reprieves from alerts, however, reset these costs. (C) 2009 Elsevier Inc. All rights reserved.