Risk preferences and subjective beliefs: implications for crop insurance subsidies
| Dates: | 4 March 2015 |
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| Times: | 13:00 - 14:00 |
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| What is it: | Seminar |
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| Organiser: | School of Social Sciences |
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| Who is it for: | University staff, Adults, Current University students |
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Speaker: Carlo Fezzi (University of East Anglia)
Abstract:
This paper proposes a novel methodology to estimate risk preferences using market insurance data and incorporating individuals' subjective beliefs. Unlike previous studies, we refrain from making specific assumptions regarding expectations but elicit them directly from the respondents. This approach yields risk aversion estimates that are compatible with a variety of deviation from rational expectations, such as biased subjective risk perceptions. Our results reveal that the standard assumption of rational beliefs can lead to severely biased risk attitude estimates. In addition, our empirical application offers insight into the controversial policy on crop insurance subsidization.
For more information:
http://www.socialsciences.manchester.ac.uk/subjects/economics/our-research/workshop-and-seminars/environmental-and-resource-economics/
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