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Simon WEIDENHOLZER (Londres) – “Loss Aversion in the Domain of Probabilities”

October 12, 2022 @ 12:15 pm

Séminaire Microéconomie : Tous les mercredis
Heure : 12h15 – 13h30
Date : 12 octobre 2022
Salle : 3001

Simon WEIDENHOLZER (Londres) – “ Loss Aversion in the Domain of Probabilities

Abstract :
We study how individuals react to changes in probabilities and outcomes in simple gambles. We find that -much like in the spirit of Kahneman and Tversky – individuals display loss aversion in the domain of probabilities, i.e. they react to changes of probabilities of a reference lottery and probability losses loom larger than probability gains. We furthermore find that the effect of changing probabilities is at least as large as the effect of changing outcomes of the reference lottery (keeping the expected value of the reference lottery constant). We argue that the observed non-linearity in probabilities of the reference lottery is not accounted for by some prominent models of reference dependent preferences and offer an adopted version that can explain our findings.

Organisateurs :
Julien COMBE (Pôle d’Economie du CREST)
​​Roxana FERNANDEZ (Pôle d’Economie du CREST)
​​Matias NUNEZ (Pôle d’Economie du CREST)

Commanditaires :