Modelling refugee migration under cognitive biases: Experimental evidence and policy

In this paper, we develop a model for refugee migration. As refugees’ migration choices are made in a risk-laden environment, we compare two different theoretical frameworks of decision making under risk, namely Expected Utility Theory (EUT) and Cumulative Prospect Theory (CPT). This last framework...

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Bibliographic Details
Published in:Journal of behavioral and experimental economics 2023-04, Vol.103, p.101969, Article 101969
Main Authors: Bocquého, Géraldine, Deschamps, Marc, Helstroffer, Jenny, Jacob, Julien, Joxhe, Majlinda
Format: Article
Language:English
Subjects:
Cumulative Prospect Theory
Economics and Finance
Experimental economics
Humanities and Social Sciences
Refugee migration
Risk preferences
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Summary:In this paper, we develop a model for refugee migration. As refugees’ migration choices are made in a risk-laden environment, we compare two different theoretical frameworks of decision making under risk, namely Expected Utility Theory (EUT) and Cumulative Prospect Theory (CPT). This last framework accounts for a reference point, loss aversion, and probability distortion. We estimate refugees’ risk and time preference parameters using field experimental data and show CPT better explains refugees’ risk behaviour on average. We also investigate policy implications based on simulations. We show that, under CPT, compared to standard EUT, the value of migrating is consistently lower and the migration decision is more sensitive to policy changes. Our results suggest refugees may self-select based on their risk preferences, those exhibiting more loss aversion or less probability sensitivity being more likely to renounce migration as a reaction to migration policies. •We compare two theoretical models for refugee migration based respectively on Expected Utility and Cumulative Prospective theories.•Our theoretical predictions postulate that the Cumulative Prospect Theory fits better the refugees’ migration.•We sample 218 refugees in Luxembourg and gather information on their risk attitudes through an experimental protocol.•The experimental test confirm that CPT framework explains better refugees’ risk behaviours.•We finally simulate our models and find that refugees may self-select based on their risk-profile.
ISSN:2214-8043
2214-8051
DOI:10.1016/j.socec.2022.101969