Businessmen's risk perception in China following the 1999 Chinese Embassy bombing and the 2001 EP-3 incident

Economists have developed sophisticated models to determine risk in a financial setting. The present value of a future asset is determined after accounting for riskiness. The risk metric yielded is supposed to provide businessmen with a tool to help choose the best among a variety of investment alternatives. This dissertation attempts to improve on Frank Knight's concept of the estimate by incorporating risk perception research. The 1999 Embassy bombing and the 2001 EP-3 incident were the basis for interviews and surveys conducted with businessmen in Shanghai, China. The businessmen were questioned about their perceptions of risk and investment decisions during the two crises aftermath. The results were compared and contrasted with a professional risk group's analysis of investment risk in China. It was found that the businessmen's risk perceptions varied significantly from that of risk analysts, and some businessmen chose to cancel or delay impending investments.