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

• Main Author: Nguyen, Quang.
• Other Authors: School of Humanities and Social Sciences
• Format: Article
• Language: English
• Published: 2012
• Subjects: DRNTU::Social sciences::Economic development::Vietnam
• Online Access: https://hdl.handle.net/10356/95147; http://hdl.handle.net/10220/8918
• Institution: Nanyang Technological University

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.