Violence and risk preference: experimental evidence from Afghanistan: comment

Vieider, F. M. (2018) Violence and risk preference: experimental evidence from Afghanistan: comment. American Economic Review, 108 (8). pp. 2366-2382. ISSN 0002-8282 doi: 10.1257/aer.20160789

Abstract/Summary

In this comment on Callen et al. (2014), I revisit recent evidence uncovering a "preference for certainty" in violation of dominant normative and descriptive theories of decision-making under risk. I show that the empirical findings are potentially confounded by systematic noise. I then develop choice lists that allow me to disentangle these different explanations. Experimental results obtained with these lists reject explanations based on a preference for certainty in favor of explanations based on random choice. From a theoretical point of view, the levels of risk aversion detected in the choice list involving certainty can be accounted for by prospect theory through reference dependence activated by salient outcomes.