Individual differences in loss aversion and preferences for skewed risks across adulthood.

Seaman, Kendra Leigh; Green, Mikella A.; Shu, Stephen; Samanez-Larkin, Gregory R.

doi:10.1037/pag0000261

Cited by 16 publications

(21 citation statements)

References 24 publications

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“…One surprising result that was that we did not see any age di erences in acceptance of skewed gambles. This is surprising because it was in direct contrast to prior studies that have found a relationships (Seaman et al, 2018(Seaman et al, , 2017. Even limiting our sample to those who answered a similar question (Study 1, expected value = $0, N = 41), we see no e ects of age (although it should be noted this subsample skews older than the whole study sample;…”

Section: Discussioncontrasting

confidence: 66%

“…We predict that the positive-skew bias will increase with greater skewness in both certain (Study 1) and uncertain (Study 2) conditions. Further, we wanted to examine how the age-related positive-skew bias observed in our previous studies (Seaman et al, 2018(Seaman et al, , 2017 is impacted by these di erent levels of skewness. We predict that the positive-skew bias will increase with age and that this bias will become more pronounced with higher degrees of skewness.…”

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confidence: 97%

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Boundary Conditions for the Positive Skew Bias

Seaman¹,

Abiodun

2020

Preprint

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Gambles that involve a large but unlikely gain coupled with a small but likely loss – like purchasing a lottery ticket or insurance – are positively-skewed. Positively-skewed gambles are preferred by people. Here we attempt to better understand when people are more drawn towards positively-skewed outcomes. For instance, animal research suggests that there may be a greater preference for more strongly-skewed options. Here we explore if this trend extends to humans. In two online studies (Study 1: n = 209; Study 2: n = 210), healthy participants between the ages of 22 and 85 made choices between a positively-skewed gamble and either a certain outcome (Study 1) or a symmetric gamble (Study 2). After making their choices, participants were queried about their decision-making strategy, affective status, cognitive abilities, and real-world financial decision making. Logistic regression analyses revealed that people were more likely to accept moderately- and strongly-skewed gambles over equivalent certain outcomes (Study1), but they less likely to accept moderately- and strongly-skewed gambles over equivalent symmetric gambles (Study 2). Exploratory analyses revealed that participants who were more likely to accept skewed gambles endorsed an affective strategy (Study 1) and reported experiencing higher arousal (Study 2). Participants in both studies with stronger cognitive abilities were less likely to accept skewed gambles. Collectively, these results suggest greater preference for more strongly positively-skewed gambles is (1) limited to potential gains and (2) more common when choosing between a skewed option and a certain outcome.

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Section: Discussioncontrasting

confidence: 66%

mentioning

confidence: 97%

Boundary Conditions for the Positive Skew Bias

Seaman¹,

Abiodun

2020

Preprint

Self Cite

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“…These accounts might suggest that older individuals would be less loss averse because emotion regulation improves with age (Gross et al, 1997). Previous research on age and loss aversion has yielded mixed results (Mikels & Reed, 2009;Pachur, Mata, & Hertwig, 2017;Seaman, Green, Shu, & Samanez-Larkin, 2018;Weller, Levin, & Denburg, 2011). Across the five samples, we examined whether age is associated with loss aversion.…”

Section: Preference Construction Shapes Loss Aversionmentioning

confidence: 96%

Moderating Loss Aversion: Loss Aversion Has Moderators, But Reports of its Death are Greatly Exaggerated

et al. 2020

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Loss aversion, the principle that losses impact decision making more than equivalent gains, is a fundamental idea in consumer behavior and decision making, though its existence has recently been called into question. Across five unique samples (N total = 17,720), we tested several moderators of loss aversion, which supported a preference construction account. Across studies, more domain knowledge and experience were associated with lower loss aversion, though people of all knowledge and experience levels were loss averse. Among car buyers, those who knew more about a particular car attribute (e.g., fuel economy) were less loss averse for that attribute but not other attributes (e.g., comfort), consistent with the idea that people with less attribute knowledge are more likely to construct preferences, thereby increasing loss aversion. Additionally, older consumers were more loss averse across different loss aversion measures and studies. We discuss implications for several accounts of loss aversion, including accounts rooted in status quo bias, emotion, or ownership. In addition to discovering loss aversion moderators, we cast doubt on recent claims that loss aversion is a fallacy or is fully explained by status quo bias, risk aversion, or the educated laboratory samples often used to study loss aversion.

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“…Thinking about decumulation decisions in a loss aversion context suggests applying loss aversion manipulations to interventions. Various methods can measure loss aversion at the individual level (e.g., Abdellaoui, Bleichrodt, & Paraschiv, 2007; Brooks & Zank, 2005; Payne, Shu, Webb, & Sagara, 2015; Seaman, Green, Shu, & Samanez-Larkin, 2018; Toubia, Johnson, Evgeniou, & Delquié, 2013). As with the temporal discounting measures noted above, knowledge of a given individual’s loss aversion level may assist policy makers in customizing interventions to better assist people’s decumulation decision making.…”

Section: Key Psychological Inputs To Decumulation Decisionsmentioning

confidence: 99%

The Psychology of Decumulation Decisions During Retirement

Shu

2018

Policy Insights from the Behavioral and Brain Sciences

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Key Points • • Drawing down one's savings in retirement-known as "decumulation"-is of growing policy importance. • • Current research in both psychology and economics has begun to identify how psychological drivers can affect individuals' decumulation decisions. • • Individual differences in self-control, discounting, and loss aversion, plus affective reactions such as feelings of fairness and psychological ownership can drive financial decisions during decumulation. • • We propose five main policy approaches to influencing decumulation decisions, depending on the decision maker's level of psychological sophistication. • • Financial industry regulators and social program administrators can implement low-cost solutions, such as disclosures and defaults, to improve the wellbeing of tens of millions of retirees.

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Individual differences in loss aversion and preferences for skewed risks across adulthood.

Cited by 16 publications

References 24 publications

Boundary Conditions for the Positive Skew Bias

Boundary Conditions for the Positive Skew Bias

Moderating Loss Aversion: Loss Aversion Has Moderators, But Reports of its Death are Greatly Exaggerated

The Psychology of Decumulation Decisions During Retirement

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