American Economic Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
Violence and Risk Preference: Experimental Evidence from Afghanistan
American Economic Review
vol. 104,
no. 1, January 2014
(pp. 123–48)
Abstract
We investigate the relationship between violence and economic risk preferences in Afghanistan combining: (i) a two-part experimental procedure identifying risk preferences, violations of Expected Utility, and specific preferences for certainty; (ii) controlled recollection of fear based on established methods from psychology; and (iii) administrative violence data from precisely geocoded military records. We document a specific preference for certainty in violation of Expected Utility. The preference for certainty, which we term a Certainty Premium, is exacerbated by the combination of violent exposure and controlled fearful recollections. The results have implications for risk taking and are potentially actionable for policymakers and marketers.Citation
Callen, Michael, Mohammad Isaqzadeh, James D. Long, and Charles Sprenger. 2014. "Violence and Risk Preference: Experimental Evidence from Afghanistan." American Economic Review, 104 (1): 123–48. DOI: 10.1257/aer.104.1.123Additional Materials
JEL Classification
- A12 Relation of Economics to Other Disciplines
- C91 Design of Experiments: Laboratory, Individual
- D12 Consumer Economics: Empirical Analysis
- D74 Conflict; Conflict Resolution; Alliances
- D81 Criteria for Decision-Making under Risk and Uncertainty
- O12 Microeconomic Analyses of Economic Development
- O17 Formal and Informal Sectors; Shadow Economy; Institutional Arrangements