Risk Compensation definition

Risk Compensation, which was studied in detail in relation to motorway accidents by Professor Sam Peltzman in 1975, describes the way that humans will in fact be more likely to take greater risks when they feel they’re protected by certain factors.

For example, the Peltzman Effect came from Prof. Peltzman’s study that found that measures taken to reduce road traffic accidents actually had no real effect at all as, when people felt like they were safe because they were required by law to wear their seatbelt or their car was fitted with auto-lock brakes, then they were actually more likely to drive faster or more dangerously close to the cars in front, believing themselves to be in a reduced state of risk.

In web marketing, knowledge of Risk Compensation can be applied to encourage conversion through making your customer feel like your website is a safe place to shop. If they feel secure and happy then they will be more likely to actually make purchases and even make more purchases than they would have done otherwise. Adding https (protocol for secure communication), trust badges and customer testimonials to your site will make your customer feel like they’re shopping in a secure environment and put them in the right state of mind to make purchases on your site.

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