Abstract
We conducted an artefactual field experiment in Vietnam to investigate whether and how experiencing a natural disaster affects individual attitudes toward risks. Using experimental and real household data, we show that households in villages affected by a flood in recent years exhibit more risk aversion, compared with individuals living in similar but unaffected villages. Interestingly, this result holds for the loss domain, but not the gain domain. In line with Prospect Theory, Vietnamese households distort probabilities. The distortion is related to aid received and social networks participation, but is unrelated to flood experience.
Keywords
Risk preferences; Non-expected utility; Flood; Vietnam; Field experiment;
JEL codes
- D9: Intertemporal Choice
- Q54: Climate • Natural Disasters • Global Warming
- Q56: Environment and Development • Environment and Trade • Sustainability • Environmental Accounts and Accounting • Environmental Equity • Population Growth
- C93: Field Experiments
Reference
Cécile Aubert, and Arnaud Reynaud, “Does flood experience modify risk preferences? Evidence from an artefactual field experiment in Vietnam”, The Geneva Risk and Insurance Review, vol. 45, n. 1, March 2020, pp. 36–74.
See also
Published in
The Geneva Risk and Insurance Review, vol. 45, n. 1, March 2020, pp. 36–74