This research examines capital income taxation for a loss averse investor under some acceptable in the literature … the attractive full loss offset provisions. However, risk taking can be stimulated if the investor interprets part of the … tax as a loss instead as a reduced gain. Then investor becomes risk seeking and moves away from the discomfort zone of …

uncertainty about future income triggers saving because of loss aversion. We extend their theoretical analysis to also consider … the internal margin, i.e., the strength, of loss aversion, and empirically study the relation between income risk …, experimentally elicited loss aversion and precautionary savings. We do so using a sample of 640 individuals from the low …

triggers an increase in saving because of loss aversion. Guided by the theoretical model of Koszegi and Rabin (2009), we first … extend their theoretical analysis to also consider the internal margin, i.e., the strength, of loss aversion, and then … empirically study the relation between income risk, experimentally elicited loss aversion, and precautionary savings. We do so …