Questions tagged [loss-aversion]

Loss aversion is a behavioral bias capturing the notion that people tend to prefer avoiding losses over acquiring equivalent gains. In economics, this bias is illustrated in theoretical, experimental and empirical work.

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Why does global suspension of economic activity result in catastrophic loss/debt?

Covid-19 has forced a suspension of at least 50% of financial transactions and business activities. Materially, not much has been lost: consumables have been spared, equipment is dormant, ...
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Dominated lotteries in CPE

I have been looking into expectation-based loss aversion following Kőszegi-Rabin (2005, 2007). In particular, I find their choice-acclimating personal equilibrium (CPE) interesting, but it has a ...
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Kőszegi - Rabin (2006) model problem

First of all, that's a homework question, and I will try to make it as useful to future readers as possible. Problem So, I was given a problem about the model described by Botond Kőszegi and ...
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Shopping example in Kőszegi / Rabin (2006)

In "Section IV Shopping" of Kőszegi / Rabin (A model of reference-dependent preferences, QJE 2006), the example of consumer buying a pair of shoes is given. They claim that "her disutility from ...