Abstract
In this paper, we investigate the asymmetry in effects of changes in regional risk rankings on relative land prices by exploiting the fact that the urban redevelopment proceeding during the 2000s changed dramatically regional risk rankings in the Tokyo metropolitan area. We find that in previously safe areas, a decrease in risk rankings (being even safer) has significantly positive impacts on relative land prices, while in previously dangerous areas, an increase in risk rankings (being even riskier) has substantially negative effects on them. These findings may be interpreted according to some implications of prospect theory; the former as a preference for zero risk and the latter as status-quo effects.
