While the traditional conceptualization of the effect of losses focuses on bias in the subjective weight of losses compared with respective gains, some accounts suggest more global task-related effects of losses. Based on a recent attentional theory, we predicted a positive after-effect of losses on choice switching in later tasks. In two experimental studies, we found increased choice switching rates in tasks with losses compared to tasks with no losses. Additionally, this heightened shifting behavior was maintained in subsequent tasks that do not include losses, a phenomenon we refer to as "loss restlessness." Conversely, gains were found to have an opposite "calming" effect on choice switching. Surprisingly, the loss restlessness phenomenon was observed following an all-losses payoff regime but not after a task with symmetric mixed gains and losses. This suggests that the unresolved mental account following an all-losses regime increases search behavior. Potential implications to macro level phenomena, such as the leverage effect, are discussed.

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Experimental studies in the area of Psychology and Behavioral Economics have suggested that people change their search pattern in response to positive and negative events. Using Internet search data provided by Google, we investigated the relationship between stock-specific events and related Google searches. We studied daily data from 13 stocks from the Dow-Jones and NASDAQ100 indices, over a period of 4 trading years. Focusing on periods in which stocks were extensively searched (Intensive Search Periods), we found a correlation between the magnitude of stock returns at the beginning of the period and the volume, peak, and duration of search generated during the period. This relation between magnitudes of stock returns and subsequent searches was considerably magnified in periods following negative stock returns. Yet, we did not find that intensive search periods following losses were associated with more Google searches than periods following gains. Thus, rather than increasing search, losses improved the fit between people’s search behavior and the extent of real-world events triggering the search. The findings demonstrate the robustness of the attentional effect of losses.

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Economic bubbles are an empirical puzzle because they do not readily fit the notion of an efficient market. We argue that bubbles are associated with a conflict and a gap in the allocation of effort during negotiation by sellers and buyers. We examined 21 experimental asset markets where in one condition players could buy and sell and in the other they could either buy or sell. The results indicated that when making concurrent buying and selling decisions the mean number of asks for sellers was 71% higher than the number of bids for buyers. Similar findings emerge in a re-analysis of data from Lei et al. (2001). Importantly, bubbles only emerged in markets where the number of asks was larger than that of bids. These findings indicate that bubbles are associated with increased negotiation effort when acting as a seller and diminished effort when acting as a buyer.