Topic
Loss aversion
About: Loss aversion is a research topic. Over the lifetime, 2898 publications have been published within this topic receiving 115198 citations.
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TL;DR: In this paper, the authors model the role of fear of failure in the decision to become an entrepreneur and subsequent investments made in pursuit of success using the framework of loss aversion and show that when an individual's threshold for success is sufficiently high, fear of failing motivates additional investment.
Abstract: Fear of failure can dominate the choices of individuals. We model its role in the decision to become an entrepreneur and subsequent investments made in pursuit of success using the framework of loss aversion. We show that when an individual's threshold for success is sufficiently high, fear of failure motivates additional investment. When the threshold for success is equal to the foregone outside option, on the other hand, fear of failure is always de-motivating. Finally, regardless of the success threshold, fear of failure is negatively associated with entry into entrepreneurship. Our findings highlight the importance of the interaction between the degree of fear of failure and the aspirations of the would-be entrepreneur.
15 citations
TL;DR: In this article, it is shown that the interaction between long-and short-run returns may have important explanatory value for investment decisions, while loss aversion may drive investors to sometimes act against their beliefs about market sentiments.
Abstract: Returns of equities tend to exhibit momentum in the short to medium term and reversals in the longer term. While presenting results partly supporting such findings, we demonstrate that investors rely on multiple reference points in their trading behaviour. In particular it is shown that the interaction between long- and short-run returns may have important explanatory value for investment decisions. Predictions of future stock prices furthermore tend to be positively biased when evaluated against trading patterns, while loss aversion may drive investors to sometimes act against their beliefs about market sentiments. Implications for market responses to price movements are discussed.
15 citations
TL;DR: Evidence is presented that the effect of tense on discounting is tied to differences in the contemplation emotion of these events, which is assessed by measuring participants’ emotions while they either anticipated or remembered the event.
Abstract: We compared the extent to which people discounted positive and negative events in the future and in the past. We found that the tendency to discount gains more than losses (i.e., the sign effect) emerged more strongly for future than for past outcomes. We present evidence from six studies (total N = 1,077) that the effect of tense on discounting is tied to differences in the contemplation emotion of these events, which we assessed by measuring participants' emotions while they either anticipated or remembered the event. We ruled out loss aversion, uncertainty, utility curvature, thought frequency, and connection to the future and past self as explanations for this phenomenon, and we discuss why people experience a distinct mixture of emotions when contemplating upcoming events.
15 citations
TL;DR: The evidence shows that regulatory focus influences asymmetric effects and can thus help airline companies design a better recovery strategy for revenue management and underpin a more realistic assumption for future theory building.
15 citations
TL;DR: This study urges trade associations and business leaders to immunize their SCs by considering behavioral biases and social influences and revisiting their contractual obligations.
Abstract: This paper studies a luxury sporting goods supply chain (LSGSC) experiencing trade disruption and market volatility. We propose a flexible trade credit contract with minimum order quantity (MOQ) and design a coordination mechanism between a supplier and a loss-averse wholesaler. We extend our study to a multi-tiered product setting and examine the impacts of social influences and loss aversion on SC decisions and channel coordination. Given the gloomy post-Covid-19 economic prospects in an era of reglobalization, this study urges trade associations and business leaders to immunize their SCs by considering behavioral biases and social influences and revisiting their contractual obligations.
15 citations