Deciding for Others Reduces Loss Aversion
(2016) In Management Science 62(1). p.29-36- Abstract
- We study risk taking on behalf of others, both when choices involve losses and when they do not. A large-scale incentivized experiment with subjects randomly drawn from the Danish population is conducted. We find that deciding for others reduces loss aversion. When choosing between risky prospects for which losses are ruled out by design, subjects make the same choices for themselves as for others. In contrast, when losses are possible, we find that the two types of choices differ. In particular, we find that subjects who make choices for themselves take less risk than those who decide for others when losses loom. This finding is consistent with an interpretation of loss aversion as a bias in decision making driven by emotions and that... (More)
- We study risk taking on behalf of others, both when choices involve losses and when they do not. A large-scale incentivized experiment with subjects randomly drawn from the Danish population is conducted. We find that deciding for others reduces loss aversion. When choosing between risky prospects for which losses are ruled out by design, subjects make the same choices for themselves as for others. In contrast, when losses are possible, we find that the two types of choices differ. In particular, we find that subjects who make choices for themselves take less risk than those who decide for others when losses loom. This finding is consistent with an interpretation of loss aversion as a bias in decision making driven by emotions and that these emotions are reduced when making decisions for others. (Less)
Please use this url to cite or link to this publication:
https://lup.lub.lu.se/record/4617181
- author
- Andersson, Ola LU ; Holm, Jerker LU ; Tyran, Jean-Robert and Wengström, Erik LU
- organization
- publishing date
- 2016
- type
- Contribution to journal
- publication status
- published
- subject
- keywords
- risk taking, loss aversion, experiment
- in
- Management Science
- volume
- 62
- issue
- 1
- pages
- 8 pages
- publisher
- Informs
- external identifiers
-
- wos:000372114300002
- scopus:84961350837
- ISSN
- 0025-1909
- DOI
- 10.1287/mnsc.2014.2085
- language
- English
- LU publication?
- yes
- id
- 9a65b0f0-cc05-47b8-9ee9-d3b34f84f0cc (old id 4617181)
- date added to LUP
- 2016-04-01 11:14:42
- date last changed
- 2022-04-28 08:12:18
@article{9a65b0f0-cc05-47b8-9ee9-d3b34f84f0cc,
abstract = {{We study risk taking on behalf of others, both when choices involve losses and when they do not. A large-scale incentivized experiment with subjects randomly drawn from the Danish population is conducted. We find that deciding for others reduces loss aversion. When choosing between risky prospects for which losses are ruled out by design, subjects make the same choices for themselves as for others. In contrast, when losses are possible, we find that the two types of choices differ. In particular, we find that subjects who make choices for themselves take less risk than those who decide for others when losses loom. This finding is consistent with an interpretation of loss aversion as a bias in decision making driven by emotions and that these emotions are reduced when making decisions for others.}},
author = {{Andersson, Ola and Holm, Jerker and Tyran, Jean-Robert and Wengström, Erik}},
issn = {{0025-1909}},
keywords = {{risk taking; loss aversion; experiment}},
language = {{eng}},
number = {{1}},
pages = {{29--36}},
publisher = {{Informs}},
series = {{Management Science}},
title = {{Deciding for Others Reduces Loss Aversion}},
url = {{http://dx.doi.org/10.1287/mnsc.2014.2085}},
doi = {{10.1287/mnsc.2014.2085}},
volume = {{62}},
year = {{2016}},
}