 Decision-making Under Risk among Small Farmers in East UgandaSteven J. Humphrey and Arjan Verschoor Journal of African Economies, 2004, vol. 13, issue 1, 44-101 Abstract: We report an experimental test of individual decision-making behaviour under risk conducted in rural east Uganda. The test employs an incentive compatible design where subjects were paid according to the outcome of one of their choices. We find that the risk preferences of east Ugandan farmers exhibit systematic and predictable deviations from expected utility maximisation. These include violations of the independence and transitivity axioms of expected utility theory, and reference-dependent preferences. Not all deviations are the same as those which emerge from tests using (generally) student subjects at First World universities (e.g., we observe an S-shaped rather than an inverse S-shaped probability weighting function). We also find evidence of a substantial stochastic component to behaviour. The implications of our findings in terms of the appropriate characterisation of risk preferences in applied policy analyses are discussed. Copyright 2004, Oxford University Press. Date: 2004 There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:oup:jafrec:v:13:y:2004:i:1:p:44-101 Ordering information: This journal article can be ordered from Access Statistics for this article Journal of African Economies is currently edited by Francis Teal More articles in Journal of African Economies from Centre for the Study of African Economies Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK. Contact information at EDIRC. |
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