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Risk preferences under heterogeneous environmental risk

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Author Info

  • Roland Olbrich

    ()
    (Department of Sustainability Sciences and Department of Economics, Leuphana University of Lueneburg, Germany)

  • Martin F. Quaas

    (Department of Economics, University of Kiel, Germany)

  • Andreas Haensler

    (Terrestrial Hydrology Group, Max-Planck-Institute for Meteorology, Hamburg, Germany)

  • Stefan Baumgaertner

    (Department of Sustainability Sciences and Department of Economics, Leuphana University of Lueneburg, Germany)

Abstract

We study risk preferences and their determinants for commercial cattle farmers in Namibia who are subject to high and heterogeneous precipitation risk, using data from questionnaire and field experiments, simulated data for on-farm precipitation risk and data on famers’ previous place of residence. We find that the relationship between risk preferences and precipitation risk is contingent on early-life experience with this risk. We also find that adult farmers self-select themselves onto farms according to their risk preferences. Results are not confounded by background risks or liquidity constraint.

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Bibliographic Info

Paper provided by University of Lüneburg, Institute of Economics in its series Working Paper Series in Economics with number 208.

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Length: 42 pages
Date of creation: Aug 2011
Date of revision:
Handle: RePEc:lue:wpaper:208

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Web page: http://leuphana.de/institute/ivwl.html

Related research

Keywords: risk preferences; environmental risk; experimental elicitation; endogenous preferences; self-selection; field experiment;

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Cited by:
  1. Roland Olbrich & Martin F. Quaas & Stefan Baumgaertner, 2012. "Characterizing commercial cattle farms in Namibia: risk, management and sustainability," Working Paper Series in Economics 248, University of Lüneburg, Institute of Economics.

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