Behavioral Biases and Firm Behavior: Evidence from Kenyan Retail Shops

Michael Kremer, Jean Lee (), Jonathan Robinson and Olga Rostapshova

American Economic Review, 2013, vol. 103, issue 3, 362-68

Abstract: Many subjects in lab experiments exhibit small-stakes risk aversion, consistent with loss aversion. Those with greater math skills are less likely to show small-stakes risk aversion. We argue that departures from expected utility maximization may help explain why many firms in developing countries leave high expected return investments unexploited. We show that among a sample of Kenyan shopkeepers, inventories are negatively associated with small-stakes risk aversion and positively associated with math skills.

JEL-codes: D22 D81 D91 G31 O14 (search for similar items in EconPapers)
Date: 2013
Note: DOI: 10.1257/aer.103.3.362
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Citations: View citations in EconPapers (31)

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