Risk and Refugee Migration

This paper uses the experimental setup of Tanaka et al. (2010) to measure
refugees’ risk preferences. A sample of 206 asylum seekers was interviewed in
2017-18 in Luxembourg. Contrary to studies which focus on risk aversion in general,
we analyze its components using a cumulative prospect theory (CPT) framework.
We show that refugees exhibit particularly low levels of risk aversion compared
to other populations and that CPT provides a better fit for modelling risk attitudes.
Moreover, we include randomised temporary treatments provoking emotions
and find a small significant impact on probability distortion. Robustness of
the Tanaka et al. (2010) experimental framework is confirmed by including treatments
regarding the embedding effect. Finally, we propose a theoretical model
of refugee migration that integrates the insights from our experimental outcomes
regarding the functional form of refugees’ decision under risk and the estimated parameter values. The model is then simulated using the data from our study.