Loss aversion around the world: Empirical evidence from pension funds

Xie, Yuxin; Hwang, Soosung; Pantelous, Athanasios A.

doi:10.1016/j.jbankfin.2017.11.007

Cited by 28 publications

(11 citation statements)

References 61 publications

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“…They contend this is not because of the disposition effect (based on loss aversion) as argued by Odean (1998), but simply because of perceived mean reversion on the part of the trader. While those arguments were largely refuted in scientific and mainstream literature (Ritholtz, 2018), and multiple global trials have generally confirmed normative patterns within countries (Rieger et al, 2011;Wang et al, 2017;Xie et al, 2018) relevant debates on loss aversion raised in behavioural science literature continue.…”

Section: Debates and Basis For Replicationmentioning

confidence: 99%

Not lost in translation: Successfully replicating Prospect Theory in 19 countries

Ruggeri¹,

Alí²,

Berge³

et al. 2019

Preprint

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Kahneman and Tversky’s 1979 article on Prospect Theory is one of the most influential papers across all of the behavioural sciences. The study tested a series of binary financial (risky) choices, ultimately concluding that judgments formed under uncertainty deviate significantly from those presumed by expected utility theory, which was the prevailing theoretical construct at the time. In the forty years since publication, this study has had a remarkable impact on science, policy, and other real-world applications. At the same time, a number of critiques have been raised about its conclusions and subsequent constructs that were founded on it, such as loss aversion. In an era where such presumed canonical theories have increasingly drawn scrutiny for inability to replicate, we attempted a multinational study of N = 4,099 participants from 19 countries and 13 languages. The same methods and procedures were used as in the original paper, adjusting only currencies to make them relative to current values, and requiring all participants to respond to all items. Overall, we found that results replicated for 94% of the 17 choice items tested. At most, results from the 1979 study were attenuated in our findings, which is most likely due to a more robust sample. Twelve of the 13 theoretical contrasts presented by Kahneman and Tversky also replicated, with a further 89% replication rate of the total contrasts possible when separating by location, up to 100% replication in some countries. We conclude that the principles of Prospect Theory replicate beyond any reasonable thresholds, and provide a number of important insights about replications, attenuation, and implications for the study of human decision-making at population-level.

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Section: Debates and Basis For Replicationmentioning

confidence: 99%

Not lost in translation: Successfully replicating Prospect Theory in 19 countries

Ruggeri¹,

Alí²,

Berge³

et al. 2019

Preprint

View full text Add to dashboard Cite

show abstract

“…We investigate differences in investment decisions for SI in general and impact investments in particular. Xie, Hwang, and Pantelous (2018) argue that experiments alone tend to underestimate the role of loss aversion as tested in experiments, in comparison to real-life risk-taking or risk-avoiding decisions.…”

Section: Datamentioning

confidence: 94%

“…Moreover, Das et al (2010) show under which assumptions a mean-variance investor's decision is equivalent to the decision of a behavioral investor, and that a behavioral approach yields slightly less efficient results if investors cannot borrow against future gains. Finally, besides modelling non-financial factors in multiple-attribute utility functions, they can be modeled in referencedependent utility, in which loss aversion enters together with other parameters for risk aversion and subjective probability weighting (Xie, Hwang, and Pantelous 2018).…”

Section: Motivations To Invest To Achieve Social and Environmental Pementioning

confidence: 99%

Drivers of Investor Motivations for Impact Investments: The Case of Microfinance

2019

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Recent empirical research shows that both financial and value-related considerations prevail for an individual's decision to invest in companies or products deemed sustainable or socially responsible. This paper investigates how different investor motivations vary across forms of sustainable investment strategies, in particular between broad sustainable investments and targeted impact investments. We use a unique dataset of retail investors engaged in a development oriented microfinance investment vehicle to analyze how different motives affect the demand for distinct sustainable investments. Our results show that different motives trigger different types of sustainable investments. While decisions to engage in general sustainable investments are mainly linked to return and risk expectations, the investment decision for the impact investment vehicle is connected more strongly to value attributes. In line with previous findings on general sustainable investments, we find that the decision to invest is driven more by value-related criteria while the amount invested is driven by financial motivations. Our analysis furthermore shows that distrust in the financial markets is a major driver for the share invested in general sustainable investments, but not in impact investments.

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“…Greek society appears to be strongly characterized by the behavior of averting damage and this may be the case following the judgment of Covid-19. The results of the study of Xie, Ηwang, and Pantelous ( 2017 ) are clear, where the authors conclude that the Greek society has the lowest score of 32 countries in loss aversion (0.33 when the average of the countries is 1.74). Note that this means more loss aversion.…”

Section: Loss Aversion and The Other Cultural Dimensions In Greek Socmentioning

confidence: 98%

“…8.5 Loss aversion behavior ( Note The lower a country’s score, the more loss aversion behaviour it shows. Source Xie et al [ 2017 ] and authors’ creation) …”

Section: Loss Aversion and The Other Cultural Dimensions In Greek Socmentioning

confidence: 99%

Human Behaviors

Petrakis¹,

Kostis²

2020

The Evolution of the Greek Economy

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The cultural dimensions and social psychological stereotypes are the cognitive constructs that link the past to the present and determine the future. In this chapter the cultural evolution of the Greek society is presented, as one of the most critical factors that have affected the responses to the crisis, but not adequately enough emphasized in the economic policy that was undertaken to confront the crisis. The key developments that are observed and related to the Greek social environment and related to the quality of life of Greeks are presented, as well as the political trends and the economic behavior of Greek society, and the trend towards loss-aversion behaviors. Lastly, the effects of Covid-19 pandemic on human behaviors are presented.

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Loss aversion around the world: Empirical evidence from pension funds

Cited by 28 publications

References 61 publications

Not lost in translation: Successfully replicating Prospect Theory in 19 countries

Not lost in translation: Successfully replicating Prospect Theory in 19 countries

Drivers of Investor Motivations for Impact Investments: The Case of Microfinance

Human Behaviors

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