Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/242732 
Authors: 
Year of Publication: 
2014
Series/Report no.: 
Centre for Land Tenure Studies Working Paper No. 10/14
Publisher: 
Norwegian University of Life Sciences (NMBU), Centre for Land Tenure Studies (CLTS), Ås
Abstract: 
This paper studies the risk preferences of poor rural households in Malawi and compares the Holt and Laury (2002) (HL) multiple price list approach with hypothetical real-world framing and monetary incentive-compatible framing with the Tanaka, Camerer and Nguyen (2010) (TCN) monetary framing approach to elicit prospect theory parameters. The consistency of the results, the role of and potential bias attributable to measurement error, and correlations with socioeconomic characteristics are assessed. The study shows that measurement error can lead to upward bias in risk aversion estimates and over-weighting of low probabilities. The hypothetical real–world HL framing experiments are associated with higher sensitivity to background variation such as exposure to a recent drought shock and distance to markets/poor market access.
Subjects: 
expected utility theory
prospect theory
risk preferences
loss aversion
probability weighting
field experiment
multiple price lists
measurement error
Malawi
JEL: 
C93
D03
O12
ISBN: 
978-82-7490-235-0
Document Type: 
Working Paper

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