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Risk preferences and the decision to flee conflict

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  • Ceriani,Lidia
  • Verme,Paolo

Abstract

Despite the growing numbers of forcibly displaced persons worldwide, many people living under conflict choose not to flee. Individuals face two lotteries -- staying or leaving -- characterized by two distributions of potential outcomes. This paper proposes to model the choice between these two lotteries using quantile maximization as opposed to expected utility theory. The paper posits that risk-averse individuals aim at minimizing losses by choosing the lottery with the best outcome at the lower end of the distribution, whereas risk-tolerant individuals aim at maximizing gains by choosing the lottery with the best outcome at the higher end of the distribution. Using a rich set of household and conflict panel data from Nigeria, the paper finds that risk-tolerant individuals have a significant preference for staying and risk-averse individuals have a significant preference for fleeing, in line with the predictions of the quantile maximization model. These findings are contrary to findings on economic migrants, and call for separate policies toward economic and forced migrants.

Suggested Citation

  • Ceriani,Lidia & Verme,Paolo, 2018. "Risk preferences and the decision to flee conflict," Policy Research Working Paper Series 8376, The World Bank.
  • Handle: RePEc:wbk:wbrwps:8376
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    Cited by:

    1. Ekhator-Mobayode,Uche Eseosa & Hanmer,Lucia C. & Rubiano Matulevich,Eliana Carolina & Arango,Diana Jimena, 2020. "Effect of Armed Conflict on Intimate Partner Violence : Evidence from the Boko Haram Insurgency in Nigeria," Policy Research Working Paper Series 9168, The World Bank.
    2. Verme, Paolo & Schuettler, Kirsten, 2021. "The impact of forced displacement on host communities: A review of the empirical literature in economics," Journal of Development Economics, Elsevier, vol. 150(C).
    3. Di Maio,Michele & Leone Sciabolazza,Valerio & Molini,Vasco, 2020. "Migration in Libya : A Spatial Network Analysis," Policy Research Working Paper Series 9110, The World Bank.
    4. Issifou,Ismael, 2020. "Understanding Decisions Made on Asylum Applications in Host Countries," Policy Research Working Paper Series 9153, The World Bank.

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    More about this item

    Keywords

    Gender and Development; Energy Policies&Economics; Educational Sciences; Energy and Mining; Social Cohesion;
    All these keywords.

    JEL classification:

    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D1 - Microeconomics - - Household Behavior
    • D3 - Microeconomics - - Distribution
    • D6 - Microeconomics - - Welfare Economics
    • D7 - Microeconomics - - Analysis of Collective Decision-Making
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty

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