2015 Student Research Conference:
28th Annual Student Research Conference

The Irony of Loss Aversion Part I: How Avoiding Losses Makes Us Losers
Roxanne Chong*, Sarah A. Hemme, and Mattea Pezza
Dr. Robert Tigner, Faculty Mentor

Loss aversion is generally defined as a higher sensitivity to losses than to gains. People dont like to lose money, nor do they like to lose options or freedoms. This study pitted money loss against option loss in an effort to discover which type of loss aversion was strongest. Participants played a game in which they repeatedly picked one of three options to earn money governed by a hidden payout schedule. The only way to keep all three options available is to continually switch between them, but each switch costs money. Participants demonstrated a strong aversion to losing options in all conditions. When the game was reframed so that participants lost money with each choice, they continued to switch options. Since the options only added misery in this condition, it appears that our aversion to losing options is stronger than our aversion to losing money.

Keywords: loss aversion, aversion to loss, decision-making, behavioral economics

Topic(s):Psychology

Presentation Type: Oral Paper

Session: 210-1
Location: VH 1328
Time: 11:45

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