Conflicting risk attitudes

Amrei M Lahno,Marta Serra-Garcia,Ben D’Exelle,Arjan Verschoor

doi:10.1016/j.jebo.2015.03.003

Abstract

This paper examines whether differences in individual risk attitudes are related to interpersonal conflict. In more than thirty villages of rural Uganda, we conduct a social survey to document social links between pairs of individuals within a village, and separately elicit individual risk attitudes using an incentivized task. Our 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.

Highlights

Conflict is pervasive in many different kinds of groups, ranging from small and large societies to organizations and teams (Simmel, 1955; Coser, 1998)
We ask, are two individuals with different risk attitudes more likely to suffer from interpersonal conflict? Our study focuses on a society that has historically suffered from violence among its people, the Bagisu people in Eastern Uganda (Heald, 1998)
This section examines whether differences in individual risk attitudes are related to the likelihood of interpersonal conflict

Summary

Introduction

Conflict is pervasive in many different kinds of groups, ranging from small and large societies to organizations and teams (Simmel, 1955; Coser, 1998). Conflict, both violent and non-violent has very harmful economic effects. Opportunities to trade or invest are forgone when two parties cannot reach an agreement. Understanding when conflict is most likely to arise is especially important in developing countries, where it strongly hinders the improvement of economic and social conditions (Blattman and Miguel, 2010). Consider that in small-scale societies with imperfect credit and insurance markets and a paucity of formal savings instruments, a dense network of relationships, many of them kin-based, governs investment behavior

Results

Discussion

Conclusion