Shocks, Risk Preferences and the Labor Market: Evidence from a Natural Experiment in Palestine

The paper used a series of field experiments in the Palestinian Territories to explore the impact of exposure to traumatic events on risk, time and ambiguity preferences, using the historical episode of the construction of the separation wall between the State of Israel and the West Bank as an exogenous traumatic experience to test shifts in fundamental preferences. The main conclusion is that individuals exposed to the wall are significantly more risk-seeking and ambiguity-averse.