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Risk Experiments in Gains and Losses: A Case Study for Benin

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  • Jonathan Gheyssens
  • Isabel Günther

Abstract

The aim of this paper is to expand our knowledge on risk aversion among the poor by conducting experiments that do not only test risk aversion in small and large stakes but also in risky gains and risky losses. To our knowledge, this is the first attempt to conduct experiments in poor communities strictly focused on the loss domain. The experiments were conducted with 120 poor rural households in Benin. In contrast to results in industrialized countries, we find that playing lotteries constrained to the loss domain dramatically increases risk aversion.

Suggested Citation

  • Jonathan Gheyssens & Isabel Günther, 2012. "Risk Experiments in Gains and Losses: A Case Study for Benin," WIDER Working Paper Series wp-2012-038, World Institute for Development Economic Research (UNU-WIDER).
    • Handle: RePEc:unu:wpaper:wp-2012-038
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    Households; Management; Poor; Religion;
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