Incentivized experiments are often used to identify the time preferences of households in developing countries. We argue theoretically and empirically that experimental measures may not identify preference parameters, but are a useful tool for understanding financial shocks and constraints. Using data from an experiment in Mali, we find that subject responses vary with savings and financial shocks, meaning they provide information about credit constraints and can be used to test models of risk sharing.

© 2020 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology
2020
The President and Fellows of Harvard College and the Massachusetts Institute of Technology

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