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Does the exposure to natural hazards affect risk and time preferences? Some insights from a field experiment in Perú

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  • Mohamed Ali Bchir
  • Marc Willinger

Abstract

We report the results of an experiment on voluntary contributions to a public good in which we implement a redistribution of the group endowment among group members in a lump sum manner. We study the impact of redistribution on group contribution, on individuals’ contribu- tions according to their endowment and on welfare. Our experimental results show that welfare increases when equality is broken, as predicted by theory (Itaya, De Meza & Myles, 1997), because the larger contribution of the rich subjects overcompensates the lower contribution of the poor subjects. Last but not least, agents’ behavior in situations of inequality of income, depends on initial conditions. In particular, the decisions of those who become poor seem to express a form of protest against the new distribution of incomes compared to those who started out as poor: from a behavioral point of view, being poor is therefore not equivalent to becoming poor.

Suggested Citation

  • Mohamed Ali Bchir & Marc Willinger, 2013. "Does the exposure to natural hazards affect risk and time preferences? Some insights from a field experiment in Perú," Working Papers 13-04, LAMETA, Universtiy of Montpellier, revised Mar 2013.
  • Handle: RePEc:lam:wpaper:13-04
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    File URL: http://www.lameta.univ-montp1.fr/Documents/DR2013-04.pdf
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    References listed on IDEAS

    as
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    Cited by:

    1. Lukas Menkhoff & Sahra Sakha, 2016. "Determinants of Risk Aversion over Time: Experimental Evidence from Rural Thailand," Discussion Papers of DIW Berlin 1582, DIW Berlin, German Institute for Economic Research.
    2. Alex Imas & Michael A. Kuhn & Vera Mironova, 2015. "A History of Violence: Field Evidence on Trauma, Discounting and Present Bias," CESifo Working Paper Series 5338, CESifo Group Munich.
    3. Matthias Doepke & Fabrizio Zilibotti, 2017. "Parenting With Style: Altruism and Paternalism in Intergenerational Preference Transmission," Econometrica, Econometric Society, vol. 85, pages 1331-1371, September.
    4. Alex Imas & Michael A. Kuhn & Vera Mironova, 2016. "Waiting to Choose," CESifo Working Paper Series 6162, CESifo Group Munich.
    5. Chuang, Yating & Schechter, Laura, 2015. "Stability of experimental and survey measures of risk, time, and social preferences: A review and some new results," Journal of Development Economics, Elsevier, vol. 117(C), pages 151-170.
    6. Kahsay, Goytom Abraha & Osberghaus, Daniel, 2016. "Extreme weather and risk preference: Panel evidence from Germany," ZEW Discussion Papers 16-032, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    7. Callen, Michael, 2015. "Catastrophes and time preference: Evidence from the Indian Ocean Earthquake," Journal of Economic Behavior & Organization, Elsevier, vol. 118(C), pages 199-214.

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