?At least I didn?t lose money? Nominal Loss Aversion Shapes Evaluations of Housing Transactions

Jean-Robert Tyran and Thomas A Stephens

No 9198, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: Loss aversion is one of the most robust findings to have emerged from behavioral economics. Surprisingly little attention, however, has been devoted to nominal loss aversion, the interaction of loss aversion and money illusion. People tend to think of transactions in terms of their nominal (monetary) values. Real losses may therefore loom larger in people?s minds when they lose money than when real losses are hidden by purely nominal gains. Using a survey experiment with a large and heterogeneous sample, we show that evaluations of housing transactions are systematically biased by purely nominal gains versus losses.

Keywords: Bounded rationality; Housing transactions; Loss aversion; Money illusion (search for similar items in EconPapers)
JEL-codes: A10 C91 D00 (search for similar items in EconPapers)
Date: 2012-10
New Economics Papers: this item is included in nep-exp, nep-upt and nep-ure
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Citations: View citations in EconPapers (3)

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Working Paper: “At least I didn’t lose money” - Nominal Loss Aversion Shapes Evaluations of Housing Transactions (2012)
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