Violence and risk preference: experimental evidence from Afghanistan

Mike Callen, Mohammad Isaqzadeh, James D. Long and Charles Sprenger

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

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.

JEL-codes: A12 C91 D12 D74 D81 O12 O17 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2014-01-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (299)

Published in American Economic Review, 1, January, 2014, 104(1), pp. 123 - 148. ISSN: 0002-8282

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