Questions About The Existence of Loss Aversion
Recently, studies have questioned the existence of loss aversion. In several studies examining the effect of losses in decision making under risk and uncertainty no loss aversion was found. There are several explanations for these findings: one, is that loss aversion does not exist in small payoff magnitudes; the other, is that the generality of the loss aversion pattern is lower than that thought previously. Finally, losses may have an effect on attention but not on the weighting of outcomes; as suggested, for instance, by the fact that losses lead to more autonomic arousal than gains even in the absence of loss aversion.
Loss aversion may be more salient when people compete. Gill and Prowse (2012) provide experimental evidence that people are loss averse around reference points given by their expectations in a competitive environment with real effort.
Loss aversion and the endowment effect are often confused. Gal (2006) argued that the endowment effect, previously attributed to loss aversion, is more parsimoniously explained by inertia than by a loss/gain asymmetry.
Read more about this topic: Loss Aversion
Famous quotes containing the words questions about, questions, existence, loss and/or aversion:
“If you think about it seriously, all the questions about the soul and the immortality of the soul and paradise and hell are at bottom only a way of seeing this very simple fact: that every action of ours is passed on to others according to its value, of good or evil, it passes from father to son, from one generation to the next, in a perpetual movement.”
—Antonio Gramsci (1891–1937)
“There is the falsely mystical view of art that assumes a kind of supernatural inspiration, a possession by universal forces unrelated to questions of power and privilege or the artist’s relation to bread and blood. In this view, the channel of art can only become clogged and misdirected by the artist’s concern with merely temporary and local disturbances. The song is higher than the struggle.”
—Adrienne Rich (b. 1929)
“‘Tis going, I own, like the Knight of the Woeful Countenance, in quest of melancholy adventures—but I know not how it is, but I am never so perfectly conscious of the existence of a soul within me, as when I am entangled in them.”
—Laurence Sterne (1713–1768)
“Ours is a culture based on excess, on overproduction; the result is a steady loss of sharpness in our sensory experience. All the conditions of modern life—its material plenitude, its sheer crowdedness—conjoin to dull our sensory faculties.”
—Susan Sontag (b. 1933)
“Our aversion to lying is commonly a secret ambition to make what we say considerable, and have every word received with a religious respect.”
—François, Duc De La Rochefoucauld (1613–1680)