Eliciting risk preferences in an artefactual field experiment via replication and an alternative approach

• Published in: Journal of the Economic Science Association Vol. 10; no. 2; pp. 442 - 456
• Main Author: Jozwik, Jan
• Format: Journal Article
• Language: English
• Published: New York Springer US 01.12.2024; Springer Nature B.V
• Subjects: Alternatives; Behavioral/Experimental Economics; Data replication; Economic Theory/Quantitative Economics/Mathematical Methods; Economics; Economics and Finance; Game Theory; Literacy; Literature reviews; Microeconomics; Operations Research/Decision Theory; Original Paper; Preferences; Research methodology; Risk aversion; Risk management; Social and Behav. Sciences; Utility functions; Ghana; A11; Risk preference; Artefactual field experiments; Replication; C93; D81; Elicitation methods
• ISSN: 2199-6784; 2199-6776; 2199-6784; 2199-6776
• DOI: 10.1007/s40881-024-00168-4

This paper investigates risk preferences using an artefactual field experiment conducted with a non-standard subject pool of farmers in Ghana. I introduce an alternative methodology for studying preferences following replication of a seminal risk elicitation procedure by Binswanger (Am J Agric Econ 62(3):395407, 1980). An important feature of both approaches is that they are easy to understand and, hence, are particularly suitable for eliciting preferences among subjects with low levels of formal education. I successfully replicate Binswanger’s study, documenting how his original result of the moderate level of risk aversion for an average farmer can be generalized to a different country. However, using my alternative approach, whereby lotteries are presented in the loss domain, I find that half of my experimental subjects violated expected utility theory. This approach is of relevance to the current literature on studying risk preferences among subjects with poor literacy skills.