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Are Commercial Fishers Risk Lovers?

Håkan Eggert () and Peter Martinsson

No 90, Working Papers in Economics from University of Gothenburg, Department of Economics

Abstract: Empirical studies of fishers’ preferences have found that most fishers are risk-averse, while expected-utility theory predicts risk neutrality even for sizable stakes. We test this prediction using data from a stated choice experiment with Swedish commercial fishers. Our results show that almost 90% of the respondents do not behave as expected-utility maximizers. 48% of the fishers can be broadly characterized as risk-neutral, 26% as modestly risk-averse, while 26% are strongly risk-averse. Fishers are more risk-neutral the higher the fraction of their household’s income comes from fishing, while fishers with a positive attitude to individual quotas are more risk-averse. Sensitivity testing implies that decisions with modest stakes like a few days of fishing are not influenced by wealth level.

Keywords: Expected utility; Prospect theory; Risk preferences; Stated preferences; Swedish fisheries (search for similar items in EconPapers)
JEL-codes: D81 Q22 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2003-02-26
New Economics Papers: this item is included in nep-fin
Note: Published in Land Economics, 2004, Vol. 80, pp. 550-560.
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Published in Land Economics, 2004, pages 550-560.

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