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Comprehension and Risk Elicitation in the Field: Evidence from Rural Senegal

  • Charness, Gary
  • Viceisza, Angelino

In the past decade, it has become increasingly common to use simple laboratorygames and decision tasks as a device for measuring both the preferences and understanding ofrural populations in the developing world. In this paper, we report the results observed with threedistinct risk elicitation mechanisms, using samples drawn from the rural population in Senegal,West Africa. We test the understanding of and the level of meaningful responses to the typicalHolt-Laury task, to an adaptation of a simple binary mechanism pioneered by Gneezy andPotters in 1997, and to a non-incentivized willingness-to-risk scale. We find a low level ofunderstanding with the Holt-Laury task and an unlikely-to-be-accurate pattern with thewillingness-to-risk question. Our analysis indicates that the simple binary mechanism hassubstantially more predictive power than does the Holt-Laury mechanism. Our study is acautionary note regarding utilizing either relatively sophisticated risk-elicitation mechanisms ornon-incentivized questions in the rural developing world.

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Paper provided by Department of Economics, UC Santa Barbara in its series University of California at Santa Barbara, Economics Working Paper Series with number qt5512d150.

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Date of creation: 27 Jul 2012
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Handle: RePEc:cdl:ucsbec:qt5512d150
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