The effect of subtracting a constant from all payoffs in a hawk–dove game: experimental evidence of loss aversion in strategic behavior

Economists and psychologists have documented patterns of individual decision–making behavior (e.g., loss aversion) whereby losses and gains are treated differently. However, there has been little evidence of such patterns in multi–player games. We report results showing the strongest evidence we know of that this phenomenon is present in games. Experimental subjects play two hawk–dove games that are identical up to a constant; in one, all payoffs are positive, while in the other, payoffs are negative iff both players choose “hawk”. Under both fixed–pairs and random matching, differences between the games are substantial, significant, and consistent with loss aversion. Journal of Economic Literature classifications: D81, C72, C73.