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Probabilistic Expectations in Developing Countries

Adeline Delavande ()

Annual Review of Economics, 2014, vol. 6, issue 1, 1-20

Abstract: Many decisions are made under uncertainty, and individuals are likely to form subjective expectations about the probabilities of events that are relevant to their decisions. I review here a recent and growing literature that uses probabilistic expectations elicited from survey respondents in developing countries. I first present an illustrative model of one particular decision under uncertainty—the choice of a college—to exemplify the importance of subjective expectations data for identification purposes. I then review existing evidence emphasizing that it is feasible to elicit probabilities from survey respondents in low-literacy settings and describe common patterns of answers. Finally, I describe existing applications, many of which seek to assess how expectations influence behavior, in various domains, including health, education, agricultural production, and migration.

Keywords: subjective expectations; beliefs; expected returns to education; expected HIV status; expected income (search for similar items in EconPapers)
JEL-codes: C81 O1 (search for similar items in EconPapers)
Date: 2014
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Handle: RePEc:anr:reveco:v:6:y:2014:p:1-20