Loss Averse Behavior
Peter Brooks () and
Horst Zank ()
Journal of Risk and Uncertainty, 2005, vol. 31, issue 3, 325 pages
A behavioral condition of loss aversion is proposed and tested. Forty-nine students participated in experiments on binary choices among lotteries involving small scale real gains and losses. At the aggregate level, a significant proportion of the choices are in the direction predicted by loss aversion. Individuals can be classified as loss averse (28 participants), gain seeking (12), and unclassified (9). A comparison with risk behavior for binary choices on lotteries involving only gains shows that risk attitudes vary across these domains of lotteries. A gender effect is also observed: proportionally more women are loss averse. In contrast to the predictions of comonotonic independence, the size of common outcomes has systematic influence on choice behavior. Copyright Springer Science + Business Media, Inc. 2005
Keywords: binary choice; comonotonic independence; gender effect; loss aversion; risk aversion (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:kap:jrisku:v:31:y:2005:i:3:p:301-325
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