Browse
Submit Data
Databases
API
Help

Dataset Information

29 Views

0 Connections

0 Citations

0 Reanalyses

0 Downloads

Omics score: 0

How to make loss aversion disappear and reverse: tests of the decision by sampling origin of loss aversion.

ABSTRACT: One of the most robust empirical findings in the behavioral sciences is loss aversion--the finding that losses loom larger than gains. We offer a new psychological explanation of the origins of loss aversion in which loss aversion emerges from differences in the distribution of gains and losses people experience. In 4 experiments, we tested this proposition by manipulating the range of gains and losses that individuals saw during the process of eliciting their loss aversion. We were able to find loss aversion, loss neutrality, and even the reverse of loss aversion.

SUBMITTER: Walasek L

PROVIDER: S-EPMC4312134 | biostudies-literature | 2015 Feb

REPOSITORIES: biostudies-literature

ACCESS DATA

Json Xml

Publications

How to make loss aversion disappear and reverse: tests of the decision by sampling origin of loss aversion.

Walasek Lukasz L Stewart Neil N

Journal of experimental psychology. General 20141208 1

One of the most robust empirical findings in the behavioral sciences is loss aversion--the finding that losses loom larger than gains. We offer a new psychological explanation of the origins of loss aversion in which loss aversion emerges from differences in the distribution of gains and losses people experience. In 4 experiments, we tested this proposition by manipulating the range of gains and losses that individuals saw during the process of eliciting their loss aversion. We were able to find ...[more]

PMID: 25485606

Similar Datasets

Effects of loss aversion on post-decision wagering: implications for measures of awareness.

Project description:Wagering contingent on a previous decision, or post-decision wagering, has recently been proposed to measure conscious awareness. Whilst intuitively appealing, it remains unclear whether economic context interacts with subjective confidence and how such interactions might impact on the measurement of awareness. Here we propose a signal detection model which predicts that advantageous wagers placed on the identity of preceding stimuli are affected by loss aversion, despite stimulus visibility remaining constant. This pattern of predicted results was evident in a psychophysical task where we independently manipulated perceptual and economic factors. Changes in wagering behaviour induced by changes in wager size were largely driven by changes in criterion, consistent with the model. However, for near-threshold stimuli, a reduction in wagering efficiency was also evident, consistent with an apparent but potentially illusory decrease in awareness of the stimulus. These findings challenge an assertion that post-decision wagering provides a direct index of subjective awareness.

| S-EPMC2842936 | biostudies-literature

The origin of risk aversion.

Project description:Risk aversion is one of the most basic assumptions of economic behavior, but few studies have addressed the question of where risk preferences come from and why they differ from one individual to the next. Here, we propose an evolutionary explanation for the origin of risk aversion. In the context of a simple binary-choice model, we show that risk aversion emerges by natural selection if reproductive risk is systematic (i.e., correlated across individuals in a given generation). In contrast, risk neutrality emerges if reproductive risk is idiosyncratic (i.e., uncorrelated across each given generation). More generally, our framework implies that the degree of risk aversion is determined by the stochastic nature of reproductive rates, and we show that different statistical properties lead to different utility functions. The simplicity and generality of our model suggest that these implications are primitive and cut across species, physiology, and genetic origins.

| S-EPMC4273387 | biostudies-literature

Loss aversion and market crashes.

Project description:This study proposes a rational expectation equilibrium model of stock market crashes with information asymmetry and loss averse speculators. We obtain a state-dependent linear optimal trading strategy, which makes the equilibrium price tractable. The model predicts nonlinear market depth and the result that small shocks to fundamentals (e.g., supply or informational shocks) can cause abrupt price movements. We demonstrate that short-sale constraints intensify asset price collapses relative to upward movements. The model also generates contagion between uncorrelated assets. These results are consistent with the main puzzling features observed during market crashes, namely abrupt and asymmetric price movements that are not driven by major news events but coupled with a spillover effect between unrelated markets.

| S-EPMC7338884 | biostudies-literature

Enhanced Risk Aversion, But Not Loss Aversion, in Unmedicated Pathological Anxiety.

Project description:BackgroundAnxiety disorders are associated with disruptions in both emotional processing and decision making. As a result, anxious individuals often make decisions that favor harm avoidance. However, this bias could be driven by enhanced aversion to uncertainty about the decision outcome (e.g., risk) or aversion to negative outcomes (e.g., loss). Distinguishing between these possibilities may provide a better cognitive understanding of anxiety disorders and hence inform treatment strategies.MethodsTo address this question, unmedicated individuals with pathological anxiety (n = 25) and matched healthy control subjects (n = 23) completed a gambling task featuring a decision between a gamble and a safe (certain) option on every trial. Choices on one type of gamble-involving weighing a potential win against a potential loss (mixed)-could be driven by both loss and risk aversion, whereas choices on the other type-featuring only wins (gain only)-were exclusively driven by risk aversion. By fitting a computational prospect theory model to participants' choices, we were able to reliably estimate risk and loss aversion and their respective contribution to gambling decisions.ResultsRelative to healthy control subjects, pathologically anxious participants exhibited enhanced risk aversion but equivalent levels of loss aversion.ConclusionsIndividuals with pathological anxiety demonstrate clear avoidance biases in their decision making. These findings suggest that this may be driven by a reduced propensity to take risks rather than a stronger aversion to losses. This important clarification suggests that psychological interventions for anxiety should focus on reducing risk sensitivity rather than reducing sensitivity to negative outcomes per se.

| S-EPMC5466268 | biostudies-literature

Loss Aversion and Risk Aversion in Non-Clinical Negative Symptoms and Hypomania.

Project description:In the field of behavioral decision-making, "loss aversion" is a behavioral phenomenon in which individuals show a higher sensitivity to potential losses than to gains. Conversely, "risk averse" individuals have an enhanced sensitivity/aversion to options with uncertain consequences. Here we examine whether hypomania or negative symptoms predict the degree of these choice biases. We chose to study these two symptom dimensions because they present a common theme across many syndromes with compromised decision-making. In our exploratory study, we employed a non-clinical sample to dissociate the hypomanic from negative symptom dimension regarding choice behavior. We randomly selected a sample of 45 subjects from a student population (18-37 years) without self-reported psychiatric diagnoses (n = 835). We stratified them based on percentiles into a low hypomania/low negative symptoms (n = 15), a hypomania (n = 15), and a negative symptoms group (n = 15) using the hypomanic personality scale (HPS-30) and community assessment of psychic experiences (CAPE). Participants completed a loss aversion task consisting of forced binary choices between a monetary gamble and a riskless choice without gain or loss. We found a reduced loss aversion in participants with higher negative symptoms. In addition, risk aversion was reduced in participants with higher hypomania and negative symptoms compared to low hypomania/negative symptoms. This study adds to the understanding of underlying psychological mechanisms of loss and risk aversion. Given the partially opposing nature of hypomania and negative symptoms, further work is needed to examine whether they affect loss and risk aversion via dissociable mechanisms.

| S-EPMC7538829 | biostudies-literature

Amygdala damage eliminates monetary loss aversion.

Project description:Losses are a possibility in many risky decisions, and organisms have evolved mechanisms to evaluate and avoid them. Laboratory and field evidence suggests that people often avoid risks with losses even when they might earn a substantially larger gain, a behavioral preference termed "loss aversion." The cautionary brake on behavior known to rely on the amygdala is a plausible candidate mechanism for loss aversion, yet evidence for this idea has so far not been found. We studied two rare individuals with focal bilateral amygdala lesions using a series of experimental economics tasks. To measure individual sensitivity to financial losses we asked participants to play a variety of monetary gambles with possible gains and losses. Although both participants retained a normal ability to respond to changes in the gambles' expected value and risk, they showed a dramatic reduction in loss aversion compared to matched controls. The findings suggest that the amygdala plays a key role in generating loss aversion by inhibiting actions with potentially deleterious outcomes.

| S-EPMC2840433 | biostudies-literature

Predicting the behavioural tendency of loss aversion.

Project description:Loss aversion manifests itself in rejecting a gamble of gaining or losing the same amount of money with equal chance. Although loss aversion is a well-known and intensively studied phenomenon, whether individual differences in behavioural loss aversion can be predicted using scalp potentials (EEG) remains unclear. The current study measured scalp potential when subjects played a series of fair coin-toss games in three situations (high, medium and low loss conditions). We found that most people chose to bet in the low loss condition and avoided to bet in the high loss condition. However, their betting behaviour in the medium loss condition was variable, reflecting their different behavioural tendency of loss aversion. We found that late positive complex (LPC) significantly increased when subjects accepted gambles in the low loss condition (implying potential loss), relative to when they rejected gambles in the high loss condition (implying no gain and no loss), which is consistent with the previous finding that emotional stimuli can induce enhanced LPC. We further found that the difference in the scalp potentials from the above two conditions could predict behavioural tendency of loss aversion in the medium loss condition across subjects. This result demonstrated how behavioural tendency in a situation can be predicted using EEG from other situations.

| S-EPMC6430803 | biostudies-literature

Determinants of Propranolol's Selective Effect on Loss Aversion.

Project description:Research on emotion and decision making has suggested that arousal mediates risky decisions, but several distinct and often confounded processes drive such choices. We used econometric modeling to separate and quantify the unique contributions of loss aversion, risk attitudes, and choice consistency to risky decision making. We administered the beta-blocker propranolol in a double-blind, placebo-controlled within-subjects study, targeting the neurohormonal basis of physiological arousal. Matching our intervention's pharmacological specificity with a quantitative model delineating decision-making components allowed us to identify the causal relationships between arousal and decision making that do and do not exist. Propranolol selectively reduced loss aversion in a baseline- and dose-dependent manner (i.e., as a function of initial loss aversion and body mass index), and did not affect risk attitudes or choice consistency. These findings provide evidence for a specific, modulatory, and causal relationship between precise components of emotion and risky decision making.

| S-EPMC4504802 | biostudies-literature

Myopic Loss Aversion under Ambiguity and Gender Effects.

Project description:Experimental evidence suggests that the frequency with which individuals get feedback information on their investments has an effect on their risk-taking behavior. In particular, when they are given information sufficiently often, they take less risks compared with a situation in which they are informed less frequently. We find that this result still holds when subjects do not know the probabilities of the lotteries they are betting upon. We also detect significant gender effects, in that the frequency with which information is disclosed mostly affects male betting behavior, and that males become more risk-seeking after experiencing a loss.

| S-EPMC5156393 | biostudies-literature

Decomposing loss aversion from gaze allocation and pupil dilation.

Project description:Loss-averse decisions, in which one avoids losses at the expense of gains, are highly prevalent. However, the underlying mechanisms remain controversial. The prevailing account highlights a valuation bias that overweighs losses relative to gains, but an alternative view stresses a response bias to avoid choices involving potential losses. Here we couple a computational process model with eye-tracking and pupillometry to develop a physiologically grounded framework for the decision process leading to accepting or rejecting gambles with equal odds of winning and losing money. Overall, loss-averse decisions were accompanied by preferential gaze toward losses and increased pupil dilation for accepting gambles. Using our model, we found gaze allocation selectively indexed valuation bias, and pupil dilation selectively indexed response bias. Finally, we demonstrate that our computational model and physiological biomarkers can identify distinct types of loss-averse decision makers who would otherwise be indistinguishable using conventional approaches. Our study provides an integrative framework for the cognitive processes that drive loss-averse decisions and highlights the biological heterogeneity of loss aversion across individuals.

| S-EPMC7260957 | biostudies-literature

OmicsDI is part of the ELIXIR infrastructure

OmicsDI is an Elixir interoperability service. Learn more ›

Tweets

OmicsDI Databases

PRIDE
PeptideAtlas
MassIVE
JPOST Repository
Physiome Model Repository

EGA
EVA
ENA
LINCS
PAXDB
Cell Collective

MetaboLights
Metabolomics Workbench
MetabolomeExpress
GNPS
BioModels
FAIRDOMHub

ArrayExpress
dbGaP
ExpressionAtlas
GEO
NODE

Information

Databases
Help
API
Contact us
Code on GitHub
Terms of use
Submit Data