The Impact of Exposure to Armed Conflict on Risk and Ambiguity Attitudes
67 Pages Posted: 5 May 2021 Last revised: 18 Apr 2022
Date Written: May 1, 2021
We conduct an incentive-compatible lab-in-the-field experiment with a large representative sample to study how exposure to armed conflict affects risk and ambiguity attitudes of individuals. We identify random exposure to conflict by relying on a natural experiment in Turkey created by the military institutions and the long running civil conflict. We find that as the degree of exposure to the armed conflict environment increases individuals become more tolerant to risk. Having traumatic direct experiences of armed violence, however, creates the opposite effect and renders them extremely risk averse. Such individuals are also more likely to be ambiguity averse.
Keywords: Armed Violence, Natural Experiment, Lab-in-the-field Experiment, Risk Preferences, Ambiguity Preferences, Stability of Economic Preferences
JEL Classification: C91, C93, D01, D74, D81
Suggested Citation: Suggested Citation