Deciding for Others Reduces Loss Aversion
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Deciding for Others Reduces Loss Aversion. / Andersson, Ola; Holm, Håkan J.; Tyran, Jean-Robert Karl; Wengström, Erik Roland.
I: Management Science, Bind 62, Nr. 1, 01.2016, s. 29-36.Publikation: Bidrag til tidsskrift › Tidsskriftartikel › Forskning › fagfællebedømt
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TY - JOUR
T1 - Deciding for Others Reduces Loss Aversion
AU - Andersson, Ola
AU - Holm, Håkan J.
AU - Tyran, Jean-Robert Karl
AU - Wengström, Erik Roland
N1 - the article has appeared in print 2016 (electronic pre-print is 2014)
PY - 2016/1
Y1 - 2016/1
N2 - 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.
AB - 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.
U2 - 10.1287/mnsc.2014.2085
DO - 10.1287/mnsc.2014.2085
M3 - Journal article
VL - 62
SP - 29
EP - 36
JO - Management Science
JF - Management Science
SN - 0025-1909
IS - 1
ER -
ID: 128680818