Loss aversion has been shown to be an important driver of people’s investment decisions. Encouraged by regulators, financial institutions are in search of ways to incorporate clients’ loss aversion in their risk classifications. The most critical obstacle appears to be the lack of a valid...

This study examines the ways in which the heterogeneity of elevation or curvature in probability weighting affects investors’ market participation and the equity premium. We analyze the rank-dependence utility with the generalized Wang transform (GWT) as an inverse S-shaped weighting function....

This paper examines the life-cycle impact of preference factors as experience, loss aversion, and narrow framing on explaining the empirical low stock market participation, low stock share conditional on participation, and positive relationships between financial wealth and participation as well...