There is a nuanced interplay between the provision of monetary incentives and behavioral performance. Individuals' performance typically increases with increasing incentives only up to a point, after which larger incentives may result in decreases in performance, a phenomenon known as "choking." We investigated the influence of incentive framing on choking effects in humans: in one condition, p...

The roles of loss aversion and inhibition among alternatives are examined in models of the similarity, compromise, and attraction effects that arise in choices among 3 alternatives differing on 2 attributes. R. M. Roe, J. R. Busemeyer, and J. T. Townsend (2001) have proposed a linear model in which effects previously attributed to loss aversion (A. Tversky & D. Kahneman, 1991) arise from attent...

Higher income is associated with greater well-being, but do income gains and losses affect well-being differently? Loss aversion, whereby losses loom larger than gains, is typically examined in relation to decisions about anticipated outcomes. Here, using subjective-well-being data from Germany (N = 28,723) and the United Kingdom (N = 20,570), we found that losses in income have a larger effect...

This paper presents two studies on narrow bracketing and myopic loss aversion. The first study shows that the tendency to segregate multiple gambles is eliminated if subjects face a certainty equivalent or a probability equivalent task instead of a binary choice. The second study argues that the behavioral differences previously attributed entirely to myopic loss aversion are partly because lon...

The present study first investigates the asymmetry of speedup - delay (gain and loss) and Sign Effect in Tehran Stock Exchange, then examine the effect of gender on the discount rate and explain it with the loss aversion. The sample is 403 investors in Tehran Stock Exchange, and the nonparametric Tests are used to test the research hypotheses. The research results show that there is an asymmetr...

People are more sensitive to losses than to equivalent gains when making financial decisions. We used functional magnetic resonance imaging (fMRI) to illuminate how the amygdala contributes to loss aversion. The blood oxygen level dependent (BOLD) response of the amygdala was mapped while healthy individuals were responding to 50/50 gambles with varying potential gain and loss amounts. Overall,...

This paper tests the internal consistency of time trade-off utilities. We find significant violations of consistency in the direction predicted by loss aversion. The violations disappear for higher gauge durations. We show that loss aversion can also explain that for short gauge durations time trade-off utilities exceed standard gamble utilities. Our results suggest that time trade-off measurem...

Using survey-based measures of loss aversion of mutual fund managers, we study the effects of institutional investor preferences on their investment decisions, performance, and career outcomes. Funds managed by managers with higher aversion to losses take on less downside risk and have lower risk-adjusted returns. More loss averse managers are more likely to have their contracts terminated. Our...

One of the most robust phenomena in behavioral studies of decision making is loss aversion, the tendency for people to exhibit greater sensitivity to losses than to equivalent sized gains. We measured brain activity while individuals decided whether to accept or reject gambles without feedback. This design isolated activity reflecting decisions without contamination by the anticipation or exper...

Myopic loss aversion is the combination of a greater sensitivity to losses than to gains and a tendency to evaluate outcomes frequently. Two implications of myopic loss aversion are tested experimentally. 1. Investors who display myopic loss aversion will be more willing to accept risks if they evaluate their investments less often. 2. If all payoffs are increased enough to eliminate losses, in...