Reflections on gains and losses: a 2x2x7 experiment
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- dc.contributor.author Bosch, Antoni (Bosch-Domènech)ca
- dc.contributor.author Silvestre, Joaquimca
- dc.contributor.other Universitat Pompeu Fabra. Departament d'Economia i Empresa
- dc.date.accessioned 2017-07-26T10:50:39Z
- dc.date.available 2017-07-26T10:50:39Z
- dc.date.issued 2002-09-01
- dc.date.modified 2017-07-23T02:07:10Z
- dc.description.abstract We test whether risk attitudes change when losses instead of gains are involved. The study of gain-loss asymmetries has been largely confined to reflected choices, where all the money amounts of a positive prospect are multiplied by minus one. We define the decomposition reflection = translation + probability switch, and experimentally find both a translation effect (risk attraction becomes more frequent when gains are translated into losses) and a probability switch effect (risk attraction becomes more frequent when the probability of the best outcome decreases). Surprisingly, the switch effect is somewhat stronger than the translation effect, negating a conventional reflection effect when one starts with choices between gains with a low probability of the best outcome. We conclude by arguing that, while both the translation effect and the switch effect contradict the expected utility hypothesis, the translation effect implies a deeper violation of standard preference theory.
- dc.format.mimetype application/pdfca
- dc.identifier https://econ-papers.upf.edu/ca/paper.php?id=640
- dc.identifier.citation Journal of Risk and Uncertainty, 33, 3, 2006
- dc.identifier.uri http://hdl.handle.net/10230/1084
- dc.language.iso eng
- dc.relation.ispartofseries Economics and Business Working Papers Series; 640
- 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 reflection effect
- dc.subject.keyword risk attraction
- dc.subject.keyword risk aversion
- dc.subject.keyword gains
- dc.subject.keyword losses
- dc.subject.keyword experiments
- dc.subject.keyword leex
- dc.subject.keyword Behavioral and Experimental Economics
- dc.subject.keyword Microeconomics
- dc.title Reflections on gains and losses: a 2x2x7 experimentca
- dc.type info:eu-repo/semantics/workingPaper