workingPaper
Poor people and risky business
Fecha
2006Registro en:
Zuleta, H. (2006). Poor people and risky business. Bogotá: Universidad del Rosario.
Autor
Zuleta, Hernando
Institución
Resumen
We try to explain why economic conflicts and illegal business often take place in poor countries. We use the concept of subsistence level of consumption (d) and assume a regular concave utility function for consumption levels higher than d. For consumption levels lower than d utility is constant and equal to zero. Under this framework poor agents are risk-lovers. This result helps to explain why economic conflicts are more likely to appear in poor economies and why poor agents are more willing to undertake illegal business.