Risk Averters that Love Risk? Marginal Risk Aversion in Comparison to a Reference Gamble

Just, David R.; Lybbert, Travis J.

doi:10.1111/j.1467-8276.2009.01273.x

Cited by 15 publications

(12 citation statements)

References 33 publications

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“…). The bar charts with the mentioned probabilities follow previous work on marginal probability distributions that indicate various pay‐off distributions to producers (Just and Lybbert, ). In an adjustment to the mean‐variance approach of expected utility theory, we include the variance of returns as one of the attributes of the financial product in the mixed logit model.…”

Section: Conceptual Frameworkmentioning

confidence: 99%

The effects of traffic light labels and involvement on consumer choices for food and financial products

Drescher

Roosen

Marette

2014

Int J Consumer Studies

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Traffic light (TL) labels that inform consumers regarding product safety have received increasing attention in different fields. Behind the background of behavioural economics, this paper presents the results of a split-sample choice experiment conducted in Germany to evaluate the impact of TL labelling on purchases of food and financial products. We hypothesize that consumers experience different levels of involvement with these two types of products, leading to different recommendations regarding the use of TLs. The results show that TLs affect consumer purchases of both product groups by focusing their attention on specific product attributes. For food, whereas the low-fat attribute has no significant impact on food choices that do not include TLs, this attribute has a positive impact on choices once it is signalled with a TL label. The positive evaluation of the organic production attribute of a food product without a TL decreases when the same product is labelled with a TL. In the case of financial products, TLs significantly reinforce the impact of all characteristics on choice probability. TLs also generate a halo effect with regard to return variance. Although consumers demonstrate different levels of involvement for the two types of products, involvement does not always impact the evaluation of attributes. Compared with less involved consumers, more involved consumers exhibit more heterogeneous evaluations of the return variability attribute in the case of the financial product and the organic attribute in the case of the food product.

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Section: Conceptual Frameworkmentioning

confidence: 99%

The effects of traffic light labels and involvement on consumer choices for food and financial products

Drescher

Roosen

Marette

2014

Int J Consumer Studies

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“…The risk experiment, based on Lybbert and Just (2007) and Just and Lybbert (2009), consisted of four hypothetical farming seasons. 10 For each "season" the farmer was asked through a verbal exercise based on 7 Data of the last seven years.…”

Section: Description Of the Experimentsmentioning

confidence: 99%

“…Remarkably, only 16% of the respondents appear to be risk averse when choosing between lotteries L 1 and To gain a better understanding of what drives WTP, we regress WTP on the probabilities of the distributions, input costs and output prices 12 , education level, and wealth. The intuition behind this is the following: Because the …rst-stage data is available for only a small portion of the sample, clustered bootstrapping causes selection issues…”

Section: Risk Loving Behaviormentioning

confidence: 99%

Why Farmers Sometimes Love Risks: Evidence from India

Maertens¹,

Just²,

Chari³

2011

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Using a unique dataset collected among farmers in India's semi-arid tropics, we document the surprising prevalence of risk-taking behavior in the face of high-stakes gambles. The evidence suggests that this apparently anomalous behavior is due to a combination of credit constraints and non-convexities in production. In particular, the high-stakes nature of the gambles creates the potential for a farmer to undertake a productive investment that would normally be una¤ordable and thereby move to a permanently higher level of income. The degree to which farmers are willing to accept risk in return for this opportunity appears to relate in an intuitive way to their current agricultural production technology as well as the demographic composition of their household.

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“…over risky distributions ðsee, e.g., Dillon and Scandizzo 1978;Binswanger 1980;Just and Lybbert 2009;Yesuf and Bluffstone 2009;Liu 2013Þ. 2 Following in the line of this second strand of the literature, we conducted experiments to measure the attitudes toward risk among cotton farmers in three villages in India. These attitudes were elicited via farmers' evaluations of hypothetical ðbut realisticÞ production alternatives involving various risky outcomes.…”

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confidence: 99%

Why Farmers Sometimes Love Risks: Evidence from India

2011

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Risk Averters that Love Risk? Marginal Risk Aversion in Comparison to a Reference Gamble

Cited by 15 publications

References 33 publications

The effects of traffic light labels and involvement on consumer choices for food and financial products

The effects of traffic light labels and involvement on consumer choices for food and financial products

Why Farmers Sometimes Love Risks: Evidence from India

Why Farmers Sometimes Love Risks: Evidence from India

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