Work

Behavioral Biases and Firm Behavior: Evidence from Kenyan Retail Shops

Year: 2013

Type: article

Abstract: Many subjects in lab experiments exhibit small-stakes risk aversion, consistent with loss aversion. Those with greater math skills are less likely to show small-stakes risk aversion. We argue that departures from expected utility maximization may help explain why many firms in developing countries leave high expected return investments unexploited. We show that among a sample of Kenyan shopkeepers, inventories are negatively associated with small-stakes risk aversion and positively associated with math skills.

Source: American Economic Review

DOI: 10.1257/aer.103.3.362

Authors: Michael Kremer, Jean Lee, Jonathan Robinson, Olga Rostapshova

Institutions: Harvard University, World Bank, University of California, Santa Cruz

Language: English

Topic: Decision-Making and Behavioral Economics

Subfield: General Decision Sciences

Field: Decision Sciences

Domain: Social Sciences

Open Access status: green

OpenAlex ID: W2084892499

FWCI: 4.127

Cites: 30

Cited by: 60

Related to: 10