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Are peasants risk-averse decision makers?

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  • Joseph Henrich
  • Richard McElreath

Abstract

Evidence shows that real-effort investments can affect bilateral bargaining outcomes. This paper investigates whether similar investments can inhibit equilibrium convergence of experimental markets. In one treatment, sellers’ relative effort affects the allocation of production costs, but a random productivity shock ensures that the allocation is not necessarily equitable. In another treatment, sellers’ effort increases the buyers’ valuation of a good. We find that effort investments have a short-lived impact on trading behavior when sellers’ effort benefits buyers, but no effect when effort determines cost allocation. Efficiency rates are high and do not differ across treatments.

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File URL: http://karlan.yale.edu/fieldexperiments/papers/00066.pdf
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Bibliographic Info

Paper provided by The Field Experiments Website in its series Artefactual Field Experiments with number 00066.

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Date of creation: 2002
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Handle: RePEc:feb:artefa:00066

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Web page: http://www.fieldexperiments.com

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References

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  1. Hans Binswanger, 1980. "Attitudes toward risk: Experimental measurement in rural india," Artefactual Field Experiments 00009, The Field Experiments Website.
  2. Camerer, Colin & Weber, Martin, 1992. " Recent Developments in Modeling Preferences: Uncertainty and Ambiguity," Journal of Risk and Uncertainty, Springer, vol. 5(4), pages 325-70, October.
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Citations

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Cited by:
  1. Francisco Galarza, 2009. "Choices under risk in rural peru," Artefactual Field Experiments 00047, The Field Experiments Website.
  2. Jim Engle-Warnick & Javier Escobal & Sonia Laszlo, 2006. "The Effect of an Additional Alternative on Measured Risk Preferences in a Laboratory Experiment in Peru," CIRANO Working Papers 2006s-06, CIRANO.
  3. Fessler, Daniel M.T. & Pillsworth, Elizabeth G. & Flamson, Thomas J., 2004. "Angry men and disgusted women: An evolutionary approach to the influence of emotions on risk taking," Organizational Behavior and Human Decision Processes, Elsevier, vol. 95(1), pages 107-123, September.
  4. Totin, Edmond & Stroosnijder, Leo & Agbossou, Euloge, 2013. "Mulching upland rice for efficient water management: A collaborative approach in Benin," Agricultural Water Management, Elsevier, vol. 125(C), pages 71-80.
  5. Kuilen, G. van de & Wakker, P.P., 2011. "The midweight method to measure attitudes towards risk and ambiguity," Open Access publications from Tilburg University urn:nbn:nl:ui:12-4275073, Tilburg University.
  6. Akay, Alpaslan & Martinsson, Peter & Medhin, Haileselassie & Trautmann, Stefan T., 2009. "Attitudes toward Uncertainty among the Poor: Evidence from Rural Ethiopia," IZA Discussion Papers 4225, Institute for the Study of Labor (IZA).
  7. Vieider, Ferdinand M. & Truong, Nghi & Martinsson, Peter & Pham Khanh Nam & Martinsson, Peter, 2013. "Risk preferences and development revisited: A field experiment in Vietnam," Discussion Papers, WZB Junior Research Group Risk and Development SP II 2013-403, Social Science Research Center Berlin (WZB).
  8. Cardenas, Juan Camilo & Carpenter, Jeffrey, 2013. "Risk attitudes and economic well-being in Latin America," Journal of Development Economics, Elsevier, vol. 103(C), pages 52-61.
  9. Glenn Harrison, 2005. "Field experiments and control," Artefactual Field Experiments 00057, The Field Experiments Website.
  10. Antoni Bosch & Joaquim Silvestre, 2003. "Do the Wealthy Risk More Money? An Experimental Comparison," Working Papers 10, Barcelona Graduate School of Economics.
  11. Jim Engle-Warnick & Javier Escobal & Sonia Laszlo, 2006. "Risk preference, ambiguity aversion and technology choice: Experimental and survey evidence from rural peru," Artefactual Field Experiments 00042, The Field Experiments Website.
  12. Alpaslan Akay & Peter Martinsson & Haileselassie Medhin & Stefan Trautmann, 2012. "Attitudes toward uncertainty among the poor: an experiment in rural Ethiopia," Theory and Decision, Springer, vol. 73(3), pages 453-464, September.
  13. Gong, Binglin & Yang, Chun-Lei, 2012. "Gender differences in risk attitudes: Field experiments on the matrilineal Mosuo and the patriarchal Yi," Journal of Economic Behavior & Organization, Elsevier, vol. 83(1), pages 59-65.

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