Microinsurance to foster investments and savings

People in developing countries tend to be highly risk tolerant as well as extremely impatient. This entails a focus on immediate, uncertain payoffs that risks being deleterious for their longer-term prospects. In this project, executed jointly with an insurance company in Uganda, we distribute insurance contracts in a randomised fashion to take away some of the uncertainty people face, and study the impact of the intervention on risk taking and patience, including investments and savings. At the same time, the project serves to tailor the insurance products to people's needs, and to thus foster its commercial viability, which could produce an impact on the wider society.

Psychological nudges for micro-entrepreneurship

Aspiration failures are often the root cause of failure to grow a small business. In this project, implemented in Uganda jointly with Self Help Africa, an NGO, we assess the impact of an entrepreneurship training programme. On addition to a classical training programme targeting financial and business skills,  we implement a module tailored specifically to address psychological channels and aspiration failures. We then assess the impact of these psychological modules on decision making and aspirations in the short and in the long term.

Causal determinants of preferences

Preferences have long been treated as innate, in an assumption that proved convenient for the modelling and analysis of behaviour. With the demise of this unrealistic assumption came the question of what determines preferences. We address this question using a variety of measures, methods and contexts. For instance, we have conducted cross-country comparisons of risk and uncertainty preferences using both incentivised tasks and survey question. To identify causality, we exploit natural experiments in high-risk environments as well as randomised controlled trials to create controlled, experimental variation.

Beliefs, preferences, and financial decisions

We work together with banks and financial institutions to better understand the behaviour of investors. This entails measurements of beliefs and preferences over the long term throughout the financial cycle to determine how the different elements interact. Such long-term studies are combined with randomised controlled trials on information provision and  choice presentation of interest to the financial institutions.