Tomomi Tanaka, California Institute of Technology

Abstract

We conducted field experiments to investigate how wealth, political history, occupation, and other demographic variables (from a comprehensive earlier household survey) are correlated with risk, time discounting and trust in Vietnam. Our experiments suggest risk and time preferences depend on the stage of economic development. In wealthier villages, people are less loss-averse and more patient. Our research also shows people who participate in ROSCAs (rotating credit associations) with random allocations of priority are more patient, but those who participate in bidding ROSCAs are less patient and weight probabilities nonlinearly. Results from trust game demonstrate the crowding-out effects of communism on the redistribution of wealth, because villagers in the South tend to invest more in low-income partners without expecting repayment. Our findings also suggest market activities, like starting a small trade business, are correlated with trust and trustworthiness. We also contribute to experimental methodology by using choices which three separate dimensions of risk-aversion and time discounting, which have not been used in field settings before.