Risk Aversion: Experimental evidence from South African fishing communities

We estimate the risk attitudes of a large sample of individuals from various fishing communities along the west coast of SouthAfrica. Female fishers and rights holders are found to be more risk averse than their male counterparts,while rights holders are found to be less risk averse relative to subjects without fishing rights. Risk attitudes are found to be correlated with compliance with fisheries regulations. In particular, a greater degree of risk aversion translates into a reduction in compliance. Furthermore, in the case of gender, female fishers and rights holders aremore likely to complywith fisheries regulations. Key words: compliance, experiments, fishing rights, risk attitudes, risk aversion. JEL Classifications: D81 and Q22. Financial risk is embedded in the economic environment within which commercial and small-scale fishers operate: this risk derives from product price uncertainty, imperfect information regarding resource stocks and location, dynamic changes in stock levels and prices, and the evolution of fisheries regula-tion (Smith andWilen 2005;Eggert andLokina 2007). As such, uncertainty and appetite for risk are important elements of any analysis of fisher behavior (Mistian and Strand 2000). Despite a strengthening in law enforcement in the last ten years, non-compliance in South African fisheries has persisted (Hauck 2009). The objectives of this article are to character-ize risk attitudes amongst people from South African fishing communities, and to determine how these attitudes are related to poaching and overfishing in these communities. To our knowledge, this article is the first empirical paper to relate risk preferences to compli-ance where risk preferences have been elicite