Loss aversion in the laboratory

William G. Morrison; Robert J. Oxoby

We report the results of a laboratory experiment testing for the existence of loss aversion in a standard risk aversion protocol (Holt and Laury, 2002). In our experiment, participants earn and retain money for a week before using it in an incentivized risk preference elicitation task. We find loss aversion, distinct from risk aversion, has a significant effect on behavior resulting in participants requiring higher compensation to bear risk.

MoreLess

Year of publication:	2014
Authors:	Morrison, William G. ; Oxoby, Robert J.
Publisher:	Bonn : IZA
Subject:	risk aversion \| loss aversion \| experiments \| Risikoaversion \| Risk aversion \| Experiment \| Prospect Theory \| Prospect theory \| Verlust \| Loss \| Entscheidung unter Risiko \| Decision under risk