Decision-making Under Risk among Small Farmers in East Uganda

Regional Variation in Risk and Time Preferences: Evidence from a Large-scale Field Experiment in Rural Uganda

“…Any regional variation in measured risk attitudes, however, may be due to variation in background risk, variation in preference or even variations in risk and experience that have moulded preferences (Dercon, 2008;Ogden et al, 2004;Humphrey and Verschoor, 2004). Our data does not allow us to determine whether the measured risk attitudes represent preference or background risk (Gollier and Pratt, 1996).…”

“…There may also be externality through more educated villagers, such as school teachers, that may help transfer knowledge and information to other villagers. Information is crucial in making accurate investment decisions and may also reduce excessive aversion to risks (Humphrey and Verschoor, 2004).…”

“…Therefore, incentivized experiments have become the norm to elicit the preferences, but such experiments are costly and require more controlled setting and designing than a survey (Holt and Laury, 2002;Carpenter et al, 2005). As a result, past empirical evidence from low-income countries has been based on a relatively small sample size with limited geographical variation: for example, 240 farmers in semi-arid tropical areas of India, 181 individuals in 9 villages from Southern and Northern Vietnam, 262 farming households in the State of Amhara, Ethiopia, 110 households in Northern Zambia and 205 farmers from two villages in East Uganda (Binswanger, 1981;Tanaka et al, 2010;Yesuf, 2009;Wik et al, 2004;Humphrey and Verschoor, 2004;respectively). Bauer and Chytilová (2010) experiment on discount rates was large in scale, but geographically limited to 10 villages in a single district in southern Uganda.…”

Attitudes toward uncertainty among the poor: an experiment in rural Ethiopia

“…Estimation of more flexible weighting functions requires more information and therefore more complex elicitation procedures (Abdellaoui 2000;Bleichrodt and Pinto 2000;Booij et al 2010). See Botzen and Van den Bergh (2009) and Humphrey and Verschoor (2004) for such measurements in an environmental/agricultural context. 5 Interestingly, Cohen et al (2010) report a similar finding of extreme risk aversion for a French non-student population sample.…”

Structural estimation of farmers’ risk and ambiguity preferences: a field experiment

“…Although they rely on smaller samples and provide less context than revealed-preference studies, experimental methods allow experimenters some degree of control over the decision maker's environment, enable the estimation of individual parameters using structural models, and provide alternatives to expected utility theory (Holt and Laury, 2002;Harrison andRutström, 2008, 2009;Andersen et al, 2010;Tanaka et al, 2010). Few articles in this literature elicit preferences among farmer samples and those that do are mainly carried out in the context of developing countries (Binswanger, 1980;Humphrey and Verschoor, 2004;Harrison et al, 2010;Liu, 2013). Moreover, while risk preferences have been elicited in the literature to date (Bocquého et al, 2014;Hellerstein et al, 2013;Reynaud and Couture, 2012), very few papers elicit farmer preferences for ambiguity, perhaps because separately identifying preferences for risk and ambiguity is a challenging task.…”