Abstract
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. © 2005 Springer Science + Business Media, Inc.
Original language | English |
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Pages (from-to) | 301-325 |
Number of pages | 24 |
Journal | Journal of Risk and Uncertainty |
Volume | 31 |
Issue number | 3 |
DOIs | |
Publication status | Published - Dec 2005 |
Keywords
- Binary choice
- Comonotonic independence
- Gender effect
- Loss aversion
- Risk aversion