Does Nurture Matter: Theory and Experimental Investigation on the Effect of Working Environment on Risk and Time Preferences

Posted: 13 Jul 2011

See all articles by Quang Nguyen

Quang Nguyen

Nanyang Technological University (NTU)

Date Written: July 12, 2011

Abstract

Building upon the reference dependence preferences model, we develop a theoretical framework to examine the relationship between environment and preferences. To verify the model’s prediction, we use a combined artefactual field experiment and household survey data in Vietnam to investigate whether involvement is risky and has long-run targeted benefits, thereby causing fishermen to exhibit different risk and time preferences than workers in other occupations. Using a structural model approach, we integrate prospect theory and hyperbolic time discounting into a single framework, to simultaneously estimate and correlate the parameters of both risk and time preferences with other demographic variables. The key finding that fishermen are found to be less risk-averse and more patient than others asserts the theoretical prediction about the influence of the working environment on preferences.

Suggested Citation

Nguyen, Quang, Does Nurture Matter: Theory and Experimental Investigation on the Effect of Working Environment on Risk and Time Preferences (July 12, 2011). Available at SSRN: https://ssrn.com/abstract=1884287

Quang Nguyen (Contact Author)

Nanyang Technological University (NTU) ( email )

S3 B2-A28 Nanyang Avenue
Singapore, 639798
Singapore

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