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On the sources of risk preferences in rural Vietnam

  • Dang, Duc Anh
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    In this paper, I provide a new empirical evidence that natural environment can shape individual risk preferences. By combining historical data on climate variation and contemporary survey questions on risk aversion, I find that risk aversion is significantly different for people who live in areas that have suffered high frequency of natural disasters. In particular, individuals highly affected by climate volatility show a long term risk aversion. The finding also supports the hypothesis that when people used to live in risky environment, an incremental increase in risk affects their risk preferences less.

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    File URL: https://mpra.ub.uni-muenchen.de/38738/1/MPRA_paper_38738.pdf
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    Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 38738.

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    Date of creation: Apr 2012
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    Handle: RePEc:pra:mprapa:38738
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    17. Booij, Adam S. & van de Kuilen, Gijs, 2009. "A parameter-free analysis of the utility of money for the general population under prospect theory," Journal of Economic Psychology, Elsevier, vol. 30(4), pages 651-666, August.
    18. Amos Tversky & Daniel Kahneman, 1979. "Prospect Theory: An Analysis of Decision under Risk," Levine's Working Paper Archive 7656, David K. Levine.
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