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Risk Preferences Under Heterogeneous Environmental RiskRoland OlbrichLeuphana University of Lueneburg - Dept. of Economics Martin F. QuaasUniversity of Kiel - Faculty of Economics and Social Sciences Andreas HaenslerMax Planck Institute for Meteorology Stefan BaumgärtnerLeuphana University of Lüneburg - Dept. of Sustainability Sciences and Dept. of Economics May 15, 2012 Abstract: We study risk preferences and their determinants for commercial cattle farmers in Namibia who are subject to high precipitation risk that is heterogeneous across farms. We use data on risk preferences from questionnaire and field experiments, simulated data for on-farm precipitation risk and data on famers’ previous place of residence. We find that, on average, less risk-averse farmers operate farms with higher precipitation risk. Moreover, the longer farmers experience a given precipitation risk in early life the more risk-averse they are. These findings suggest self-selection and malleability of risk preferences, respectively.
Number of Pages in PDF File: 46 Keywords: risk preferences, environmental risk, experimental elicitation, malleability of preferences, self-selection, field experiment JEL Classification: D81, Q12 working papers seriesDate posted: August 3, 2011 ; Last revised: December 11, 2012Suggested CitationContact Information
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