Loss Aversion and Territorial Disputes: Evidence from a Survey Experiment with Ethiopian University Students

In this study, we apply the insights of prospect theory, particularly with respect to loss aversion, to the study of individual preferences over territorial disputes, a key driver of inter- and intra-state conflict. Territorial borders take-on material as well as symbolic meaning to citizens. These emotional attachments are likely to increase the extent to which respondents value the territory under consideration. Importantly, these individual preferences among members of the public are likely to shape the incentives elites face at the bargaining table. We study these issues in Ethiopia, where regional borders have been a frequent cause of conflict between ethnic groups. To study how loss aversion conditions public support for conflict, we use a survey experiment with a 2 × 3 factorial design where participants are randomly assigned to one of six conditions. Each condition consists of a vignette read by the participant and the choice between two hypothetical options concerning how to divide the disputed territory. We randomly vary whether the territorial dispute is framed as either 1) a gain or 2) a loss for the respondent. Additionally, we vary conditions that add additional context by noting that the disputed territory includes either 1) significant numbers of co-ethnic residents; 2) large reserves of natural resources; or 3) no additional information.