Myopic Loss Aversion under Ambiguity and Gender Effects

Iturbe-Ormaetxe, Iñigo; Ponti, Giovanni; Tomás, Josefa

doi:10.1371/journal.pone.0161477

Cited by 7 publications

(3 citation statements)

References 23 publications

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“…It is possible, if individuals have reference-dependent preferences, that α can differ between the domains of losses and gains, as proposed by Iturbe-Ormaetxe et al ( 2011 ), Iturbe-Ormaetxe Kortajarene et al ( 2015 ). Such a shift in the discount proportion can be seen in the right panel of Figure 2 .…”

Section: Resultsmentioning

confidence: 99%

Reference Point Heterogeneity

et al. 2016

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It is well-established that, when confronted with a decision to be taken under risk, individuals use reference payoff levels as important inputs. The purpose of this paper is to study which reference points characterize decisions in a setting in which there are several plausible reference levels of payoff. We report an experiment, in which we investigate which of four potential reference points: (1) a population average payoff level, (2) the announced expected payoff of peers in a similar decision situation, (3) a historical average level of earnings that others have received in the same task, and (4) an announced anticipated individual payoff level, best describes decisions in a decontextualized risky decision making task. We find heterogeneity among individuals in the reference points they employ. The population average payoff level is the modal reference point, followed by experimenter's stated expectation of a participant's individual earnings, followed in turn by the average earnings of other participants in previous sessions of the same experiment. A sizeable share of individuals show multiple reference points simultaneously. The reference point that best fits the choices of the individual is not affected by a shock to her income.

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Section: Resultsmentioning

confidence: 99%

Reference Point Heterogeneity

et al. 2016

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“…Future studies could also consider the RPE function and analyze the difference of the RE on the participants, indicating if they modify their bets if they are winning or losing.Interestingly, both this work and the one fromHaisley, Mostafa & Loewenstein (2008) obtained almost the same proportion of men and women in their research. Therefore, the results found byIturbe-Ormaetxe, Ponti & Tomás (2016) show that men would be more susceptible to MLA. These two studies may have found similar results because of their methodological similarity, experimental procedure, and the proportion of participating men and women.…”

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confidence: 84%

Feedback and winning-losing probability effects on economic behavior in risky choices decision-making

Pérez-Acosta

Farina

Valle

et al. 2023

BEJ

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Myopic Loss Aversion (MLA) is one of the study objects of behavioral economics. It corresponds to the fact that participants, when facing choice situations, cannot rationally evaluate the risks and profits of available options, leading them to choose investments more likely to occur but less profitable. This behavior shows that they cannot evaluate the options satisfactorily, so they have sub-optimal decisions. There may be conditions for MLA more favorable for it to occur, as the frequency one shows the participant the outcomes of their choices (feedback) and the probability of winning or losing. In this way, this study aims to evaluate how feedback influences participants' choices and the influence and interaction of the winning and losing probability. This study had the participation of 80 people, ages 18 to 30 years, all university students, 29 women and 51 men, without either relation to business degree courses or familiarity with the research area on economic behavior. The experiment consisted in making nine repeated choices in a lottery game. Participants started the experiment with R$1000 (a thousand) fictitious reais (Brazilian currency); each lottery game had a cost of 150 reais, and the profits returned this invested value with an addition of more 150 reais. The results indicate that the presence of feedback induces participants to bet more. However, the winning and losing probability do not influence the invested amount, and there was no interaction between these two factors.

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“…Reference [50] studied the Nash balance in the case of loss aversion based on the newsboy game model. Reference [51] took gambling behaviors as the research object and studied the phenomenon that loss aversion makes gamblers prefer to take risks. In the field of biology, reference [52] studied the changes of neural cells' state when people are faced with loss and gain, to introduce the causes of loss aversion.…”

Section: Loss Aversionmentioning

confidence: 99%

Cooperation Promotion from the Perspective of Behavioral Economics: An Incentive Mechanism Based on Loss Aversion in Vehicular Ad-Hoc Networks

Liu

Huang

et al. 2021

Electronics

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As a special mobile ad-hoc network, Vehicular Ad-hoc Networks (VANETs) have the characteristics of high-speed movement, frequent topology changes, multi-hop routing, a lack of energy, storage space limitations, and the possible selfishness of the nodes. These characteristics bring challenges to the design of the incentive mechanism in VANETs. In the current research on the incentive mechanism of VANETs, the mainstream is the reward-based incentive mechanism. Most of these mechanisms are designed based on the expected utility theory of traditional economics and assume that the positive and negative effects produced by an equal amount of gain and loss are equal in absolute value. However, the theory of loss aversion points out that the above effects are not equal. Moreover, this will lead to a deviation between the final decision-making behavior of nodes and the actual optimal situation. Therefore, this paper proposed a Loss-Aversion-based Incentive Mechanism (LAIM) to promote the comprehensive perception and sharing of information in the VANETs. This paper designs the incentive threshold and the threshold factor to motivate vehicle nodes to cooperate. Furthermore, based on the number of messages that the nodes face, the utility function of nodes is redesigned to correct the assumption that a gain and a loss of an equal amount could offset each other in traditional economics. The simulation results show that compared with the traditional incentive mechanism, the LAIM can increase the average utility of nodes by more than 34.35%, which promotes the cooperation of nodes.

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Myopic Loss Aversion under Ambiguity and Gender Effects

Cited by 7 publications

References 23 publications

Reference Point Heterogeneity

Reference Point Heterogeneity

Feedback and winning-losing probability effects on economic behavior in risky choices decision-making

Cooperation Promotion from the Perspective of Behavioral Economics: An Incentive Mechanism Based on Loss Aversion in Vehicular Ad-Hoc Networks

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