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Loss Aversion and Seller Behaviour: Evidence from the Housing Market

Genesove, David; Mayer, Christopher - C.E.P.R. Discussion Papers - 2001

Data from downtown Boston in the 1990s show that loss aversion determines seller behaviour in the housing market. Condominium owners subject to nominal losses: (1) set higher asking prices of 25-35% of the difference between the property’s expected selling price and their original purchase...

Persistent link: https://www.econbiz.de/10005136421

Performance Measurement with Loss Aversion

Gemmill, Gordon T; Hwang, Soosung; Salmon, Mark - C.E.P.R. Discussion Papers - 2005

We examine a simple measure of portfolio performance based on prospect theory, which captures not only risk and return but also reflects differential aversion to upside and downside risk. The measure we propose is a ratio of gains to losses, with the gains and losses weighted (if desired) to...

Persistent link: https://www.econbiz.de/10005114253

Aspirations, Well-being, Risk-Aversion and Loss-Aversion

Koedijk, Kees; Pownall, Rachel A J; Statman, Meir - C.E.P.R. Discussion Papers - 2012

Financial well-being is distinct from income. Some people with high incomes suffer low financial well-being, as their incomes fall short of their aspirations. Such people feel propelled to reach their aspirations by taking risk and willing to bear losses. Conversely, some people with low incomes...

Persistent link: https://www.econbiz.de/10011083480

Perceiving Prospects Properly

Steiner, Jakub; Stewart, Colin - C.E.P.R. Discussion Papers - 2014

When an agent chooses between prospects, noise in information processing generates an effect akin to the winner’s curse. Statistically unbiased perception systematically overvalues the chosen action because it fails to account for the possibility that noise is responsible for making the...

Persistent link: https://www.econbiz.de/10011083577

Keep Up With the Winners: Experimental Evidence on Risk Taking, Asset Integration, and Peer Effects

Fafchamps, Marcel; Kebede, Bereket; Zizzo, Daniel John - C.E.P.R. Discussion Papers - 2013

The paper reports the result of an experimental game on asset integration and risk taking. We find evidence that winnings in earlier rounds affect risk taking in subsequent rounds, but no evidence that real life wealth outside the experiment affects risk taking. We find some evidence of...

Persistent link: https://www.econbiz.de/10011084146

Loss Aversion and the Asymmetric Transmission of Monetary Policy

Gaffeo, Edoardo; Petrella, Ivan; Pfajfar, Damjan; … - C.E.P.R. Discussion Papers - 2014

There is widespread evidence that monetary policy exerts asymmetric effects on output over contractions and expansions in economic activity, while price responses display no sizeable asymmetry. To rationalize these facts we develop a dynamic general equilibrium model where households’ utility...

Persistent link: https://www.econbiz.de/10011084378

Testing for Reference Dependence: An Application to the Art Market

Beggs, Alan; Graddy, Kathryn - C.E.P.R. Discussion Papers - 2005

This paper tests for reference dependence, using data from Impressionist and Contemporary Art auctions. We distinguish reference dependence based on ‘rule of thumb’ learning from reference dependence based on ‘rational’ learning. Furthermore, we distinguish pure reference dependence from...

Persistent link: https://www.econbiz.de/10005661640

Demand learning and firm dynamics: evidence from exporters

Berman, Nicolas; Rebeyrol, Vincent; Vicard, Vincent - C.E.P.R. Discussion Papers - 2015

This paper provides evidence that learning about demand is an important driver of firms' dynamics. We present a simple model with Bayesian learning in which firms are uncertain about their idiosyncratic demand parameter in each of the markets they serve, and update their beliefs as noisy...

Persistent link: https://www.econbiz.de/10011213311

Fiscal Volatility Shocks and Economic Activity

Fernández-Villaverde, Jesús; Guerron-Quintana, Pablo A.; … - C.E.P.R. Discussion Papers - 2011

We study the effects of changes in uncertainty about future fiscal policy on aggregate economic activity. Fiscal … consolidation inevitable, there is considerable uncertainty about the policy mix and timing of such budgetary adjustment. To … evaluate the consequences of this increased uncertainty, we first estimate tax and spending processes for the U.S. that allow …

Persistent link: https://www.econbiz.de/10009246602

Fiscal Union Consensus Design under the Risk of Autarky

Luque, Jaime; Morelli, Massimo; Tavares, José - C.E.P.R. Discussion Papers - 2011

Inspired by the current debate over the future of the monetary union in Europe, this paper provides a simple model for the determination of the conditions of survival of the common good, which requires the creation of an effective fiscal union. We highlight the importance of institutional design...

Persistent link: https://www.econbiz.de/10009283396