This paper attempts to provide experimental evidence on fire prevention and risk aversion among urban informal settlers using lottery choice data with real monetary prizes. The paper estimates the risk attitudes of a sample of 174 individuals from an informal housing development in Cape Town. The empirical analysis is performed within the expected utility theory specification, assuming constant relative risk aversion (CRRA) defined over the lottery prize. We tests the hypothesis that risk averse individuals will take precautionary measures in as far as possible to mitigate the risk of fire to their household. We find that individual-level fire prevention measures that are within the means of the households to effect, such as making sure that matches, lighters and paraffin are kept out of reach of children, is correlated with risk aversion, but measures, such as building of homes at least 3-5 meters from the neighbours, does not seem to be within the choice set of low-income informal dwellers. Our results further indicate that subjects who engage in fire prevention/fire safety strategies that require the "most effort" (that are most effective and costly) are significantly more risk averse relative to subjects engaging in fire safety measures that need "least effort". Contrary to expectation, distance from the main road, informal electricity connection, and the use of paraffin for lighting, heating and cooking are not correlated with risk aversion, indicating that irrespective of the risk profiles of decision makers, low-income households are often forced to make choices that increase their exposure to fire hazards.

As personal backgrounds and experiences vary, emotions stemming from exposure to violence shape a manager's risk perception and investment strategies. We document significant variation in the risk exposure of managers who were raised in states with higher per capita violence rates than those who were not. Although managers exposed to violence tend to hold more stocks in their portfolios, take less idiosyncratic risk, hold portfolios with betas closer to 1, and have less concentrated portfolios, these managers' risk-adjusted performance is not statistically different than that of their counterparts who were not exposed to violence.

Many poor farmers, especially in Africa, have not adopted recent farming innovations to improve their yields. One theory is that poor farmers are risk averse and therefore do not invest in high risk high return innovations and that risk averse farmers will only adopt larger innovations if they experience success with small ones. Risk preferences were measured in two districts in Uganda (Tororo and Kapchorwa) where adoption of agricultural innovations has been slow, and where a program is underway to encourage use of conservation agriculture practices (CAPs) to reduce soil erosion and sequester carbon. An ordered lottery selection was used to measure risk preferences and an ordered probit model was estimated. Thirty five percent of a random sample of 200 farmers in Tororo (and fifty three percent of 200 farmers in Kapchorwa) made lottery choices that implied severe or extreme risk aversion. However there was no indication that risk preferences correlate with willingness to adopt new technologies (such as CAPs). Neither wealth nor previous success with technology adoption were found to correlate with farmers' risk preferences. / Master of Science / CCRA-6 (Economic and Impact Analysis)

Abstract In this paper, we examine the behavior of subjects in a mock financial investment experiment to investigate the effects of “skin in the game” and ego utility on hedonic information acquisition decisions. We observe how often subjects “check” their portfolios after given general market returns, and whether conditions impact the existence and magnitude of the ostrich effect – the tendency to avoid information expected to be negative. When considering these experiment conditions as well as subject sex, risk aversion, curiosity, financial literacy and investing experience, we do not find an ostrich effect. We do find that females check their portfolios more often on average than males. Finally, we find that risk-averse people will check their portfolios more often, regardless of market returns or sex.

The objective of this thesis is to examine the impacts of changes in Canada’s AgriStability program on crop allocation, particularly the change in the payment trigger associated with the shift from Growing Forward (GF) to Growing Forward 2 (GF2). To examine whether this change could affect production decisions, and thereby potentially violate the WTO’s ‘green box’ criteria, farm management models are constructed for representative farms in six different Alberta regions. To incorporate risk and uncertainty into the farm model, I assume that, instead of maximizing overall gross margin, a farmer varies her crop activities to maximize expected utility subject to technological and market constraints. The models are calibrated using positive mathematical programming (PMP), which then facilitates their use for policy analysis; however, PMP is not straightforward in the case of expected utility maximization because a risk parameter also needs to be calibrated. Possible ways to address this issue are examined. Results indicate that the initial introduction of the AgriStability program tilted farmers’ planting decisions towards crops with higher returns and greater risk, but that a change in the AgriStability payout trigger (going from GF to GF2) would not further alter land-use decisions. However, the latter shift does reduce indemnities and farmers’ expected profits. Meanwhile, increases in farmers’ aversion to risk will lead to changes in crop allocations. / Graduate / 0503 / 0508 / sheriliu@uvic.ca

La thèse étudie l'impact de l'excès de confiance des banquiers sur le jugement, l'évaluation et la décision d'investissement (de crédit). Dans le but d'approfondir les recherches opposant experts et novices, nous avons répliqué notre étude sur des étudiants. Aux côtés des mesures et des analyses de l'excès de confiance, nous avons étudié l'attitude face au risque.Une étude qualitative a d'abord été menée, par entretiens semi-directifs avec des chargés d'affaires professionnels et directeurs d'agence. Nous avons observé des marques de surconfiance grâce à l'analyse lexicale quantitative et qualitative mais aucun lien de type cause à effet avec la décision n'a pu être établi.Ce travail a été complété par une expérimentation mesurant les différentes formes des concepts comportementaux et testant leurs impacts lors de jugement, évaluation et investissement dans des entreprises. Les résultats montrent un excès de confiance et une aversion au risque généralisés, sans différences significatives à ce stade entre les deux populations, mais de fortes disparités dans le processus d'étude des investissements et dans la prise de décision. Les étudiants ont tendance à former une impression immédiate sur les entreprises puis ils réviseront ce jugement lors de l'investissement. Les banquiers sont influencés dans leur choix d'investissement par les conclusions issues de la phase d'évaluation et leur niveau d'excès de confiance. / This work analyzes bankers' overconfidence in the granting process. Empirical and experimental work provides evidences that experts' judgment and students' judgment could differ. We have replicated our study on students and measure overconfidence and attitudes toward risk.In a first qualitative study, we analyze the bankers' overconfidence thanks to the interviews we made. We highlight their overconfidence; however we could not find any link such as cause/effect with their decisions.We extend our work with an experimentation with bankers and students. After measuring different forms of overconfidence and attitudes toward risk, we have tested the impact of overconfidence on a assets' study. Each participant had to judge, evaluate and decide to invest in different assets. The first results show that no differences can be made between bankers and students on the overconfidence and attitudes toward risk. Nevertheless, in the assets' study, students tend to form a global preference and revise their judgment during their investment (intervention of the risk aversion). On the opposite, bankers are influenced by the overconfidence bias and the evaluation stage when they form their investment choices.

<p>How households and individuals respond to adverse and unanticipated shocks is an important concern for both economists and policy makers. This is especially true in developing countries where poverty, weak infrastructure, and a lack of social safety nets often exacerbate the effects of adverse shocks on household welfare. My research addresses these issues in the context of three economic outcomes and behaviors - early life health and the accumulation of human capital, willingness to take on financial risk, and behavior in the labor market. The results of this research project both adds to our understanding of how life experiences shape individuals' well-being and behavior and how policy can help individuals achieve long-term improvements in the lives following adverse events.</p><p>My research focuses on households and individuals affected by a large-scale natural disaster, the 2004 Indian Ocean tsunami. I utilize data from the Study of the Tsunami Aftermath and Recovery (STAR), a unique longitudinal survey of individuals and households living in coastal communities in Aceh and North Sumatra, Indonesia, at the time of the tsunami. The STAR surveys were conducted annually for five years after the disaster and include a wide range of demographic, economic, and health measures.</p><p>In the first chapter, Child Height after a Natural Disaster, co-authored with Elizabeth Frankenberg, Duncan Thomas, and Jed Friedman, we investigate the immediate and long-run impacts on child health of in utero exposure to stress induced by the tsunami. We investigate whether in utero exposure to stress, as measured by tsunami-induced maternal posttraumatic stress, affected the growth of children born in the aftermath of the tsunami in the critical first five years of their lives. Although previous studies suggest that in utero exposure to stress is related to a number of adverse birth outcomes such as prematurity and lower birth weight, there is little evidence of the impact on linear growth, a strong correlate of later life income. We find evidence that children exposed to high levels of stress beginning in the second trimester experienced reduced growth in the first two years of their lives. We also find evidence that growth reductions largely disappear by age five. This suggests that significant catch-up growth is possible, particularly in the context of pronounced post-disaster reconstruction and economic rehabilitation.</p><p>In the second chapter, The Impact of a Natural Disaster on Observed Risk Aversion, I investigate the short and long-term impacts of the 2004 Indian Ocean tsunami on attitudes toward risk. Attitudes toward risk are important determinants of economic, demographic, and health-related behaviors, but how these attitudes evolve after an event like a natural disaster remains unclear because past research has been confounded by issues of selective exposure, mortality, and migration. My study is the first to directly address these problems by utilizing exogenous variation in exposure to a disruptive event in a sample of individuals that is representative of the population as it existed at the time of the event. In addition, intensive efforts were made to track migrants in the sample population, which is important for this study because migration is common following events like natural disasters and is likely related to attitudes toward risk. I find that physical exposure to the tsunami (e.g., seeing or hearing the tsunami or being caught up in the tsunami) causes significant short-term decreases in observed aversion to risk, especially for the poor, but few longer-term differences. This finding has important implications for the design of effective post-disaster assistance policies. In particular, it implies that post-disaster assistance programs should include aid that is consistent with the observed risk attitudes of the survivors such as job training and capital to start-up businesses.</p><p>In the last chapter, Labor Market Outcomes following the 2004 Indian Ocean Tsunami, I investigate how labor market outcomes changed in coastal communities in Aceh and North Sumatra following the tsunami and the post-disaster recovery efforts. Although restoring the livelihoods of survivors of adverse events is critical for their long-term recovery, there is little evidence from developing countries of how labor market outcomes change after such events. Using the STAR data, I find a significant and persistent increase in paid employment for younger women in urban communities. The increase occurred in communities that were heavily damaged by the tsunami and those that were not, suggesting that the impacts of the disaster on livelihoods are likely long-lasting and extend beyond the communities that were directly stuck by the disaster.</p> / Dissertation

of the master thesis Title: Modeling of risk aversion Author: František Navrátil Department: Department of Probability and Mathematical Statistics Supervisor: Doc. RNDr. Petr Lachout, CSc. Abstract: The thesis discusses various theories that are able to model investor's subjective attitude to risk. The goal of the thesis is to clearly recapitulate possible mathematical approaches and to apply them in a real situation. One of the ways to tackle the problem is to use expected utility theory and a specific shape of a utility function. Another way is to choose a suitable risk measure. Especially useful for the modelling of risk aversion is the class of spectral risk measures that enables investor to choose a risk spectrum that meets his perception of risk. The thesis contains basic definitions concerning stochastic programming - a theory essential to solve the related optimization problems. Keywords: Risk aversion, utility function, probability constraint.

In this companion paper to Broll and Mukherjee (2017), we empirically analyse how exchange rate volatilities affect firms optimal production and exporting decisions. The firms elasticity of risk aversion determines the direction of the impact of exchange rate risk on exports. Based on a flexible utility function that incorporates all possible risk preferences, a unique structurally estimable equation is used to estimate the risk aversion elasticities for a panel of Indian service sector (non-financial) firms over 2004-2015, using the quantile regression method.

Thesis advisor: Alicia Munnell / Thesis advisor: Tony Webb / Risk level of investments helps to determine investment return in the long run. Consequently, it is important to understand how investors determine their acceptable level of risk. Previous studies have suggested that women have a lower risk tolerance in investing than men. This is troubling because it means that women are likely to make lower returns on investments than men. This difference in acceptable risk could lead to income inequality between men and women during retirement as people rely on wealth generated from investments made during their lifetime to live during this stage of life. This study seeks to explain what motivates women to choose their acceptable level of investment risk by expanding on the models of previous studies, which are believed to be overly simplistic in their treatment of gender. / Thesis (BA) — Boston College, 2008. / Submitted to: Boston College. College of Arts and Sciences. / Discipline: Economics. / Discipline: College Honors Program.