Behavioral Biases and Firm Behavior : Evidence from Kenyan Retail Shops

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.

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Bibliographic Details
Main Authors: Kremer, Michael, Lee, Jean, Robinson, Jonathan, Rostapshova, Olga
Format: Journal Article biblioteca
Language:en_US
Published: American Economic Association 2013-05
Subjects:firm behavior, risk, uncertainty, life cycle models, saving, capital budgeting, manufacturing, service industries,
Online Access:http://hdl.handle.net/10986/17930
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