Flooding is one of the most dangerous natural hazards worldwide, causing widespread economic damage in coastal areas, thousands of deaths and injuries, and displacing millions of people every year. Individual homeowners can take a number of measures to reduce potential flood damage to their homes, but few people in flood-prone areas invest in these measures. This thesis examines several factors that could explain the lack of voluntary investment, including moral hazard, risk misperceptions and bounded rationality. Furthermore, this thesis investigates various incentives to stimulate investments in damage-reducing measures, such as insurance incentives, risk communication in virtual reality and social norm-nudges. This is achieved by experimental economics methods: lab experiments with students, online experiments in surveys with homeowners in flood-prone areas, as well as an economic experiment using a virtual reality experience.

Nudges based on social norms (norm-nudges) can be compelling behavioral interventions compared to traditional interventions such as taxes and regulations, but they do not work in all circumstances. We tested two empirical norm-nudge frames in an online experiment on taking measures for flood preparedness with large samples of homeowners (N = 1805) in two European countries, to evaluate the possible interactions between norm-nudge effectiveness, individual characteristics and intercultural differences. We contrasted these norm-nudge treatments with a control and norm focusing treatment by asking respondents to express their beliefs about what other respondents would do before making a decision relevant to their own payoff. We find no evidence of a treatment effect, suggesting that our social norm-nudges do not affect flood preparedness in the context of a flood risk investment game.