Portal de Periódicos da CAPES

Violence and Risk Preference: Experimental Evidence from Afghanistan

2013; American Economic Association; Volume: 104; Issue: 1 Linguagem: Inglês

10.1257/aer.104.1.123

1944-7981

Michael Callen, Mohammad Isaqzadeh, James D. Long, Charles Sprenger,

Experimental Behavioral Economics Studies

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. (JEL A12, C91, D12, D74, D81, O12, O17)