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: The results show that sleep deprivation alters decision making by altering the informational strategies that participants employ, without altering their preferences.
Abstract: Sleep deprivation alters decision making; however, it is unclear what specific cognitive processes are modified to drive altered choices. In this manuscript, we examined how one night of total sleep deprivation (TSD) alters economic decision making. We specifically examined changes in uncertainty preferences dissociably from changes in the strategy with which participants engage with presented choice information. With high test-retest reliability, we show that TSD does not alter uncertainty preferences or loss aversion. Rather, TSD alters the information the participants rely upon to make their choices. Utilizing a choice strategy metric which contrasts the influence of maximizing and satisficing information on choice behavior, we find that TSD alters the relative reliance on maximizing information and satisficing information, in the gains domain. This alteration is the result of participants both decreasing their reliance on cognitively-complex maximizing information and a concomitant increase in the use of readily-available satisficing information. TSD did not result in a decrease in overall information use in either domain. These results show that sleep deprivation alters decision making by altering the informational strategies that participants employ, without altering their preferences.
15 citations
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TL;DR: In this article, a structural model with the reference point and loss aversion for intertemporal choice was developed to estimate the coefficient of loss aversion and the reference points of individuals, and the important contributions were made by the authors.
Abstract: One of the important contributions is that a structural model with the reference point and loss aversion for intertemporal choice was developed to estimate the coefficient of loss aversion and the reference points of individuals.
15 citations
TL;DR: In this article, the authors report two experimental studies demonstrating the effect of transaction utility on purchase decisions and conclude that negative transaction utility affects purchase decisions to a higher degree than its positive counterpart.
Abstract: In consumption decisions, Thaler (1985) distinguishes acquisition and transaction utility. Whereas acquisition utility stands for the pleasure from obtaining a good, transaction utility denominates the value consumers derive from the deal itself. Transaction utility depends on a comparison of actual prices with reference to other prices such as the regular price. The present article reports two experimental studies demonstrating the effect of transaction utility on purchase decisions. In Experiment 1 (N = 90), on the basis of prospect theory (Kahneman & Tversky, 1979), it is expected that negative transaction utility affects purchase decisions to a higher degree than its positive counterpart. Results support this hypothesis. In Experiment 2 (N = 121) it is hypothesized that acquisition utility moderates the effect of transaction utility, that is, transaction utility becomes less important if a product is desired primarily for its actual value. Though both forms of utility affected purchase intentions, no ...
15 citations
Posted Content•
TL;DR: In this article, the authors argue that the compatibility between loss aversion and the law can be explained by the evolutionary theory that since losses are more painful than unattained gains, people file lawsuits for recovery of losses much more often than for unattained gain.
Abstract: Why is tort law much more developed than unjust enrichment law? Is there a reason for the very different legal treatment of governmental takings and governmental givings? Why are contract remedies structured around the four ‘interests’ and why is the disgorgement interest only marginally protected? What might explain the much greater constitutional protection of civil and political rights, compared to social and economic ones?This Article suggests that there is a common denominator to these and other puzzles: they are all best answered on the basis of loss aversion. Psychological studies have established that people do not perceive outcomes as final states of wealth or welfare. Rather, they perceive them as gains and losses, and losses ordinarily loom larger than gains. Loss aversion is thus related to fundamental characteristics of entire legal fields and their relative importance.The Article also strives to explain the compatibility between loss aversion and the law. According to an evolutionary theory, since losses are more painful than unattained gains, people file lawsuits for recovery of losses much more often than for unattained gains. Consequently, legal doctrines dealing with the former are much more developed. Another theory focuses on the mindset of legal policymakers. Legal thinking largely follows deontological morality. As such, it distinguishes between harming people and not aiding them. This theory highlights an important correspondence between psychology, morality, and law.Finally, the article explores various normative implications of loss aversion. Among other things, it argues that, ceteris paribus, the law should favor not-giving over taking. Lawmakers should consider the framing effect of legal norms and the impact of loss aversion on policymaking.
15 citations
01 Jan 2015
TL;DR: This article showed that reference-dependent effects arise in a low-level perceptual decision task with non-hedonic stimuli, which casts doubt on explanations such as loss aversion and indicates that referencedependent effects may be amenable to a general explanation at the level of the basic decision process.
Abstract: Numerous studies have demonstrated that preferences among options in riskless choice are often influenced by reference points. That is, an existing reference level or status quo can bias preferences toward new alternatives. Reference-dependent effects have typically been attributed to loss aversion (Tversky & Kahneman, 1991). The key idea is that when an option is being considered, an individual assesses the advantages and disadvantages of that option along each attribute with respect to the reference point. Disadvantages (losses) are weighted more than advantages (gains) in the decision process. This research provides new experimental evidence that 3 standard referencedependent effects arise in a low-level perceptual decision task with nonhedonic stimuli. This casts doubt on explanations such as loss aversion, which are limited to high-level decisions with hedonic stimuli, and indicates that reference-dependent effects may be amenable to a general explanation at the level of the basic decision process.
15 citations