Conflicting risk attitudes

Abstract

This paper examines whether differences in individual risk attitudes are related to interpersonal conflict. In more than 30 villages of rural Uganda, the authors conduct a social survey to document social links between pairs of individuals within a village, and separately elicit individual risk attitudes using an incentivised task. Their findings reveal that the difference in risk attitudes between two individuals is significantly and positively related to the presence of interpersonal conflict between them. This relationship is particularly strong among kin. By contrast, the strength of risk aversion per se is not related to conflict. Further, we conduct simulations that suggest that the relationship cannot be solely explained by diverging attitudes after the severing of social ties as a result of interpersonal conflict. This is an output from ‘A Behavioural Economic Analysis of Agricultural Investment Decisions in Uganda’ project