the expectations). Hence, I use the VSL and the elasticity estimates, along with my estimates from Shrestha (2017) to infer the change in perceived mortality rate for potential migrants in response to a single migrant death.

In Shrestha (2017), I find that, after controlling for an array of confounding fixed effects, one migrant death in a district reduces monthly migrant flow from that district by 0.9 percent for 12 months. This represents a total of 11 percent reduction of monthly migrant flow (albeit over a year) in response to a single death. I then calculate a one-time increase in migrant earnings necessary to induce the same number of potential migrants to migrate so that the net effect on migration is zero. Using the earnings elasticity of migration estimate of 0.7 from Section 6.2, I find that migrant earnings need to increase by 15 percent. That is, a one-time increase in migrant earnings of 15 percent will offset the reduction in migrant flows caused by a single migrant death.

Finally, I use the estimate of VSL from Section 6.2, to translate the change in earnings to change in perceived mortality rate. I use the following discretized formulation of the VSL and the elasticities to do so, where _d_ represents the perceived probability of death and _W_ is the average potential earnings from migration, _β_ is the migration effect of the death, and _ε_ is the earnings elasticity of migration. Using the preferred estimate of VSL and<sup>_<u>β</u>_</sup> _ε_<sup>=0</sup><sup>_._15fromabove,Ifindthatthechangeinperceivedprobability</sup> following a single death in the district is 6.7 per thousand.<sup>41</sup> The high perceived mortality rates expressed by the potential migrants are consistent with the effect on perceptions generated by a single death and their exposure to migrant deaths. The inexperienced potential migrants expect the mortality rate to be 27.6 per thousand per migration episode. From the estimates above, they only need 4.1 deaths in their district to generate this level of expected mortality rate starting form a prior of zero. In 2013, an average district experienced 4.3 deaths in five months, suggesting that such high level of mortality perception can be generated even if potential migrants are making decisions about mortality risks only based on past five months of migrant mortality incidences in their districts.

In Shrestha (2017), I also find evidence that potential migrants react more adversely when there have been more migrant deaths in the recent past. Subsequent migrant flow falls more drastically in response to a migrant death in districts which have experienced many migrant deaths in the recent past compared to the response in districts which have experienced few migrant deaths in the recent past. That is, potential migrants seem to be over-weighting recent deaths in forming their priors on mortality rate. In Shrestha (2017), I show that the amount of updating following a migrant death, and the responsiveness of updating recent deaths cannot be generated by a rational Bayesian learnings model. A model of a learning fallacy, the law of ‘small’ numbers, correctly predicts the over-inference result as well as the dependence on the number of deaths in the recent past (see Rabin, 2002, for mathematical formulation). Belief in the law of ‘small’ numbers, in conjunction with availability or other heuristic decision rule could also explain the high observed overestimation of mortality rate (as in Tversky and Kahneman, 1971, 1973; Kahneman and Tversky, 1974). One such heuristic explanation could be that potential migrants do not pay attention to migrant deaths unless they are actively thinking about migrating abroad, in which case they form their priors by observing migrant deaths in their districts in the past few months. Since they also commit the fallacy of believing in the law of ‘small’ numbers which makes them over-infer from recent information such as actual migrant deaths in the district or even the information provided in this study.

Hence, the high expectation of mortality rate among potential migrants is consistent with the experience potential migrants probably have and the way they appear to process it. The large extent of misinformation seems to be driven by the fallacious way they form their priors on mortality rate abroad.

> 41Assuming that each component of equation (3) is normally distributed with the estimated mean and variance, and also that these components are uncorrelated with each other, the standard error for the change in perceived mortality rate is 3 _._ 72. The calculation is robust to using VSL and elasticity estimate from the levels specification, which results in a change in perceived mortality rate of 5.8 per thousand.

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