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A Theory of Price Adjustment Under Loss Aversion

Ahrens, Steffen - 2014

We present a new partial equilibrium theory of price adjustment, based on consumer loss aversion. In line with prospect … theory, the consumers' perceived utility losses from price increases are weighted more heavily than the perceived utility … an otherwise standard dynamic neoclassical model of monopolistic competition.The resulting theory of price adjustment is …

Persistent link: https://www.econbiz.de/10013054582

Asset Integration, Risk Taking and Loss Aversion in the Laboratory

Morrison, William G. - 2019

We report on a laboratory experiment testing for the presence of loss aversion, as separate from risk aversion, utilizing an asset integration protocol designed to ensure that a loss of cash provided by the experimenter is viewed as a real loss by experimental participants. Our experimental...

Persistent link: https://www.econbiz.de/10012870215

Loss Aversion and Lying Behavior : Theory, Estimation and Empirical Evidence

Garbarino, Ellen - 2016

We theoretically show that agents with loss-averse preferences facing a decision to receive a bad financial payoff if they report honestly or to receive a better financial payoff if they report dishonestly are more likely to lie to avoid receiving the low payoff the lower the ex-ante probability...

Persistent link: https://www.econbiz.de/10012978152

Loss Aversion and the Welfare Ranking of Policy Interventions

Firpo, Sergio - 2020

In this paper we develop theoretical criteria and econometric methods to rank policy interventions in terms of welfare when individuals are loss-averse. The new criterion for "loss aversion-sensitive dominance" defines a weak partial ordering of the distributions of policy-induced gains and...

Persistent link: https://www.econbiz.de/10012835871

Hidden Insurance in a Moral Hazard Economy

Bertola, Giuseppe - 2013

We consider an economy where individuals privately choose effort and trade competitively priced securities that pay off with effort-determined probability. We show that if insurance against a negative shock is sufficiently incomplete, then standard functional form restrictions ensure that...

Persistent link: https://www.econbiz.de/10013071425

Exploitation Aversion : When Financial Incentives Fail to Motivate Agents

Carpenter, Jeffrey P. - 2013

Empirical studies of the principal-agent relationship find that extrinsic incentives work in many instances, linking rewards to performance increases effort, but that they can also backfire, reducing effort. Intrinsic motivation, the internal drive to work to master a skill or to improve one's...

Persistent link: https://www.econbiz.de/10013078830

Loss Aversion and Intertemporal Choice : A Laboratory Investigation

Oxoby, Robert J. - 2010

We present results from a laboratory study of loss aversion in the context of intertemporal choice. We investigate whether the provision of (windfall) endowments results in different elicited discount rates relative to subjects who earn income or earn and retain the income for a period before...

Persistent link: https://www.econbiz.de/10013145193

Inequality Aversion and Risk Attitudes

Ferrer-i-Carbonell, Ada - 2010

Using self reported measures of life satisfaction and risk attitudes, we empirically test whether there is a relationship between individuals inequality and risk aversion. The empirical analysis uses the German SOEP household panel for the years 1997 to 2007 to conclude that the negative effect...

Persistent link: https://www.econbiz.de/10013148355

Stated and Revealed Heterogeneous Risk Preferences in Educational Choice

Fossen, Frank M. - 2014

Stated survey measures of risk preferences are increasingly being used in the literature, and they have been compared to revealed risk aversion primarily by means of experiments such as lottery choice tasks. In this paper, we investigate educational choice, which involves the comparison of risky...

Persistent link: https://www.econbiz.de/10013058322

Earnings Dispersion, Risk Aversion and Education

Belzil, Christian; Hansen, Jorgen - 2021

We estimate a dynamic programming model of schooling decisions in which the degree of risk aversion can be inferred from schooling decisions. In our model, individuals are heterogeneous with respect to school and market abilities but homogeneous with respect to the degree of risk aversion. We...

Persistent link: https://www.econbiz.de/10013320490

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