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Are Commercial Fishers Risk Lovers?

  • Eggert, Håkan

    ()

    (Department of Economics, School of Economics and Commercial Law, Göteborg University)

  • Martinsson, Peter

    ()

    (Department of Economics, School of Economics and Commercial Law, Göteborg University)

Empirical studies of fishers’ preferences have found that most fishers are risk-averse, while expected-utility theory predicts risk neutrality even for sizable stakes. We test this prediction using data from a stated choice experiment with Swedish commercial fishers. Our results show that almost 90% of the respondents do not behave as expected-utility maximizers. 48% of the fishers can be broadly characterized as risk-neutral, 26% as modestly risk-averse, while 26% are strongly risk-averse. Fishers are more risk-neutral the higher the fraction of their household’s income comes from fishing, while fishers with a positive attitude to individual quotas are more risk-averse. Sensitivity testing implies that decisions with modest stakes like a few days of fishing are not influenced by wealth level.

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Paper provided by University of Gothenburg, Department of Economics in its series Working Papers in Economics with number 90.

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Length: 25 pages
Date of creation: 26 Feb 2003
Date of revision:
Publication status: Published in Land Economics, 2004, pages 550-560.
Handle: RePEc:hhs:gunwpe:0090
Note: Published in Land Economics, 2004, Vol. 80, pp. 550-560.
Contact details of provider: Postal: Department of Economics, School of Business, Economics and Law, University of Gothenburg, Box 640, SE 405 30 GÖTEBORG, Sweden
Phone: 031-773 10 00
Web page: http://www.handels.gu.se/econ/
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  1. Camerer, Colin & Babcock, Linda & Loewenstein, George & Thaler, Richard, 1996. "Labor Supply of New York City Cab Drivers: One Day At A time," Working Papers 960, California Institute of Technology, Division of the Humanities and Social Sciences.
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  7. Johan A. Mistiaen & Ivar E. Strand, 2000. "Location Choice of Commercial Fishermen with Heterogeneous Risk Preferences," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(5), pages 1184-1190.
  8. R. Mehra & E. Prescott, 2010. "The equity premium: a puzzle," Levine's Working Paper Archive 1401, David K. Levine.
  9. Daniel S. Holland & Jon G. Sutinen, 2000. "Location Choice in New England Trawl Fisheries: Old Habits Die Hard," Land Economics, University of Wisconsin Press, vol. 76(1), pages 133-149.
  10. Dupont, D.P., 1993. "Price Uncertainty,Expectations Formation and Fishers' Allocation Choice," Working Papers 1993-1, Brock University, Department of Economics.
  11. Johansson-Stenman, Olof & Carlsson, Fredrik & Daruvala, Dinky, 2001. "Measuring Hypothetical Grandparents Preferences For Equality And Relative Standings," Working Papers in Economics 42, University of Gothenburg, Department of Economics.
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