Scandinavian Working Papers in Economics
Working Papers in Economics,
University of Gothenburg, Department of Economics
No 90: Are Commercial Fishers Risk Lovers?
Håkan Eggert () and Peter Martinsson ()
Additional contact information
Håkan Eggert: Department of Economics, School of Economics and Commercial Law, Göteborg University, Postal: Box 640, SE 405 30 GÖTEBORG
Peter Martinsson: Department of Economics, School of Economics and Commercial Law, Göteborg University, Postal: Box 640, SE 405 30 GÖTEBORG
Abstract: Empirical studies of fishers’ preferences have found that most fishers are risk-averse, while expected-utility theory predicts risk neutrality even for sizable stakes. We test this prediction using data from a stated choice experiment with Swedish commercial fishers. Our results show that almost 90% of the respondents do not behave as expected-utility maximizers. 48% of the fishers can be broadly characterized as risk-neutral, 26% as modestly risk-averse, while 26% are strongly risk-averse. Fishers are more risk-neutral the higher the fraction of their household’s income comes from fishing, while fishers with a positive attitude to individual quotas are more risk-averse. Sensitivity testing implies that decisions with modest stakes like a few days of fishing are not influenced by wealth level.
Keywords: Expected utility; Prospect theory; Risk preferences; Stated preferences; Swedish fisheries
25 pages, February 26, 2003
Note: Published in Land Economics, 2004, Vol. 80, pp. 550-560.
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