Investment, Insurance and Weather Shocks: Evidence from a Lab Experiment in Cambodia
Chiara Falco (),
Douch Kong (),
Valentina Rotondi () and
Valeria Spelta ()
Departmental Working Papers from Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano
The paper studies the relationships between investment and insurance under risk and ambiguity. It makes use of a lab experiment to show that under ambiguity poor farmers experience a substitution effect between in- vestment and insurance. Moreover, although having the possibility to purchase an insurance increases, overall, the investment in profitable but risky inputs, this effect is heterogeneous across wealth and uncertainty status. Subsidies positively affect insurance purchase, negatively affect investment in risky inputs and reduce the substitution effect experienced by poor farmers. Finally, the paper shows that under ambiguity people rely on heuristic tools.
Keywords: Uncertainty; Insurance; Investment Response; Rural Development; Climate Change (search for similar items in EconPapers)
JEL-codes: D13 C91 D80 O13 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations Track citations by RSS feed
Downloads: (external link)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:mil:wpdepa:2016-10
Access Statistics for this paper
More papers in Departmental Working Papers from Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano Via Conservatorio 7, I-20122 Milan - Italy. Contact information at EDIRC.
Bibliographic data for series maintained by DEMM Working Papers ().