Much is understood about loss aversion (the tendency for losses to have greater hedonic impact than comparable gains), but open questions remain. First, there is debate about whether loss aversion is best understood as the byproduct of a single system within the brain that treats losses and...

Prior research has consistently demonstrated that people are reluctant to trade a good they own for an alternative good, particularly when the alternative (or “target”) represents a substantial departure from the “endowment.” We demonstrate that the endowment effect can be reduced by...

The disposition effect is the reluctance to sell assets at a loss relative to a salient point of reference, typically assumed to be the purchase price. Using data on stocks and housing sales, we show that the peak price achieved by an asset during the investor's period of holding constitutes an...

Studies of reference-dependent behavior typically examine single reference points. Using data from an online brokerage, we examine the role of multiple reference points in trading behavior. We show that, in addition to a traditional disposition effect for returns since purchase, there is also a...