Does nurture matter: theory and experimental investigation on the effect of working environment on risk and time preferences

Nguyen, Quang ORCID: https://orcid.org/0000-0002-2999-194X (2011) Does nurture matter: theory and experimental investigation on the effect of working environment on risk and time preferences. Journal of Risk and Uncertainty, 43 (3) . pp. 245-270. ISSN 0895-5646 [Article] (doi:10.1007/s11166-011-9130-4)

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Abstract

Building upon the reference dependent preferences model, we develop a theoretical framework to examine the relationship between environment and preferences. To verify the model’s prediction, we use a combined artefactual field experiment and household survey data in Vietnam to investigate whether involvement is risky and has long-run targeted benefits, thereby causing fishermen to exhibit different risk and time preferences than workers in other occupations. Using a structural model approach, we integrate prospect theory and hyperbolic time discounting into a single framework, to simultaneously estimate and correlate the parameters of both risk and time preferences with other demographic variables. The key finding that fishermen are found to be less risk-averse and more patient than others asserts the theoretical prediction about the influence of the working environment on preferences.

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