Climate change increases the risk of flooding in coastal environments. One conventional approach to reducing flood hazards is by building physical infrastructure such as levees. However, typical planning practices often neglect the impact of built infrastructure on the risk assessment of individuals around the floodplain, such as the so-called “levee effect,” in which individuals are more likely to move into or invest in a floodplain after the construction of a levee. They may further assume that relevant agents make decisions based on “objective” flood probabilities. These neglected effects may result in increased exposure and vulnerability to flood events which surpass the levee, changing the distribution of damages. We hypothesize that the levee effect is a result of the reduction in information about flood hazards due to the mitigation in nuisance flooding, disrupting how decision-making processes are informed by risk aversion. This study seeks to understand how the risk aversion of coastal populations impacts the role of levees into shifting risk from low-impact to high-impact flood events. We employ an agent-based model to simulate human-system responses to flood events and adaptation scenarios within a coastal floodplain across different levels of flood risk aversion. We use this framework to analyze the joint roles of adaptation strategies and population-level risk aversion in facilitating population sorting based on risk tolerance and identify portfolios of strategies which may result in a reduced impact of extreme flooding events.