An experimental test of loss aversion and scale compatibility

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• dc.contributor.author Bleichrodt, Hanca
• dc.contributor.author Pinto, José Luisca
• dc.contributor.other Universitat Pompeu Fabra. Departament d'Economia i Empresa
• dc.date.accessioned 2017-07-26T10:51:08Z
• dc.date.available 2017-07-26T10:51:08Z
• dc.date.issued 2000-05-01
• dc.date.modified 2017-07-23T02:05:19Z
• dc.description.abstract This paper studies two important reasons why people violate procedure invariance, loss aversion and scale compatibility. The paper extends previous research on loss aversion and scale compatibility by studying loss aversion and scale compatibility simultaneously, by looking at a new decision domain, medical decision analysis, and by examining the effect of loss aversion and scale compatibility on "well-contemplated preferences." We find significant evidence both of loss aversion and scale compatibility. However, the sizes of the biases due to loss aversion and scale compatibility vary over trade-offs and most participants do not behave consistently according to loss aversion or scale compatibility. In particular, the effect of loss aversion in medical trade-offs decreases with duration. These findings are encouraging for utility measurement and prescriptive decision analysis. There appear to exist decision contexts in which the effects of loss aversion and scale compatibility can be minimized and utilities can be measured that do not suffer from these distorting factors.
• dc.format.mimetype application/pdfca
• dc.identifier https://econ-papers.upf.edu/ca/paper.php?id=467
• dc.identifier.citation Journal of Mathematical Psychology, 46, 3, (2002), pp. 315-337
• dc.identifier.uri http://hdl.handle.net/10230/664
• dc.language.iso eng
• dc.relation.ispartofseries Economics and Business Working Papers Series; 467
• dc.rights L'accés als continguts d'aquest document queda condicionat a l'acceptació de les condicions d'ús establertes per la següent llicència Creative Commons
• dc.rights.accessRights info:eu-repo/semantics/openAccess
• dc.rights.uri http://creativecommons.org/licenses/by-nc-nd/3.0/es/
• dc.subject.keyword decision analysis
• dc.subject.keyword utility theory
• dc.subject.keyword loss aversion
• dc.subject.keyword scale compatibility
• dc.subject.keyword health
• dc.subject.keyword Microeconomics
• dc.title An experimental test of loss aversion and scale compatibilityca
• dc.title.alternative Loss Aversion and Scale Compatibility in Two-Attributive Trade-Offs
• dc.type info:eu-repo/semantics/workingPaper