Higher income is associated with greater well-being, but do income gains and losses impact on well-being differently? Loss aversion, whereby losses loom larger than gains, is typically examined with relation to decisions about anticipated outcomes. Here, using subjective well-being data from...

I analyze sequential auctions with expectations-based loss-averse bidders who have independent private values and unit demand. Equilibrium bids are history dependent and subject to a discouragement effect: the higher the winning bid in the current round is, the less aggressive the bids of the...

Does the extent of cheating depend on a proper reference point? We use a real effort task that implements a two (gain versus loss frame) times two (monitored performance versus unmonitored performance) between-subjects design to examine whether cheating is reference-dependent. Our experimental...

We test the hypothesis, based on popular and theoretical perspectives, that entrepreneurs are more action-oriented than other occupational groups. We compare their playing strategies in an optimal stopping game using a randomized online experiment among 100s of entrepreneurs, managers and...

We study risk taking on behalf of others, both with and without potential losses. A large-scale incentivized experiment is conducted with subjects randomly drawn from the Danish population. On average, decision makers take the same risks for other people as for themselves when losses are...

Previous research suggests that human reaction to risky opportunities reflects two contradicting biases: Òloss aversion", and Òlimited level of reasoning" that leads to overconfidence. Rejection of attractive gambles is explained by loss aversion, while counterproductive risk seeking is...

In this paper, we describe three different experiments that explore participants’ risk attitude. When we analyzed the average results, we found that participants behave as the S-shape value function predicts. However, breaking the data down on the individual level reveals that the S-shape is...

Does the extent of cheating depend on a proper reference point? We use a real effort task that implements a two (gain versus loss frame) times two (monitored performance versus unmonitored performance) between-subjects design to examine whether cheating is reference-dependent. Our experimental...

It is well-known that expected utility (EU) has empirical deficiencies. Cumulative prospect theory (CPT) has developed as an alternative with more descriptive validity. However, CPT's full function had not yet been quantified in the health domain. This paper is therefore the first to...

Tournaments require a large gap in prizes in order to induce incentives. The resulting unequal distribution suggests that monetary payoffs are not the only motive that determines agents’ decisions. In our experiment we test theoretical predictions about the role of envy and loss aversion in...