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Do Changing Probabilities or Payoffs in Lottery-Choice Experiments Matter? Evidence from Rural Uganda

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  • Ihli, Hanna Julia
  • Chiputwa, Brian
  • Musshoff, Oliver

Abstract

This study compares risk attitudes of smallholder farmers elicited from two different lottery designs (i) with fixed payoffs and changing probabilities and (ii) with fixed probabilities and changing payoffs. We utilize a combination of experimental and household survey data collected from 332 randomly selected smallholder coffee farmers in Uganda. Both methods reveal high proportions of farmers who are classified as risk averse. However, comparing the different risk categories shows that the two elicitation methods yield significantly different results. Furthermore, we relatively find low inconsistency rates in the response behavior for the two methods compared to other studies in the past. Specific socio-demographic and socioeconomic characteristics also affect farmers’ risk attitudes.

Suggested Citation

  • Ihli, Hanna Julia & Chiputwa, Brian & Musshoff, Oliver, 2013. "Do Changing Probabilities or Payoffs in Lottery-Choice Experiments Matter? Evidence from Rural Uganda," GlobalFood Discussion Papers 158146, Georg-August-Universitaet Goettingen, GlobalFood, Department of Agricultural Economics and Rural Development.
    • Handle: RePEc:ags:gagfdp:158146
    DOI: 10.22004/ag.econ.158146
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    2. Omotuyole Isiaka Ambali & Francisco Jose Areal & Nikolaos Georgantzis, 2021. "On Spatially Dependent Risk Preferences: The Case of Nigerian Farmers," Sustainability, MDPI, vol. 13(11), pages 1-16, May.
    3. Bauermeister, Golo & Musshoff, Oliver, 2016. "Risk Aversion and Inconsistencies - Does the Choice of Risk Elicitation Method and Display Format Influence the Outcomes?," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 235348, Agricultural and Applied Economics Association.

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