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David Gal (2006) argued that many of the phenomena commonly attributed to loss aversion, including the status quo bias, the endowment effect, and the preference for safe over risky options, are more parsimoniously explained by psychological inertia than by a loss/gain asymmetry. Gal and Rucker (2018) made similar arguments.
A famous loss-aversion experiment is to offer a subject two options: They can either either receive something like $30 in guaranteed money — or a coin flip where they can receive either $100 or ...
Daniel Kahneman, who won the 2002 Nobel Memorial Prize in Economics for his work developing prospect theory. Prospect theory is a theory of behavioral economics, judgment and decision making that was developed by Daniel Kahneman and Amos Tversky in 1979. [1]
The correlation between the two theories is so high that the endowment effect is often seen as the presentation of loss aversion in a riskless setting. However, these claims have been disputed and other researchers claim that psychological inertia , [ 20 ] differences in reference prices relied on by buyers and sellers, [ 3 ] and ownership ...
When it comes to money, it always helps to take a step back, acknowledge your emotions and weigh the risks and rewards. Hear an expert's take on 8 common mindsets that could be holding you back ...
Benartzi & Thaler (1995) contend that the equity premium puzzle can be explained by myopic loss aversion and their explanation is based on Kahneman and Tversky's prospect theory. [18] They rely on two assumptions about decision-making to support theory; loss aversion and mental accounting. [ 18 ]
Participants in experiments who watched training videos and played debiasing games showed medium to large reductions both immediately and up to three months later in the extent to which they exhibited susceptibility to six cognitive biases: anchoring, bias blind spot, confirmation bias, fundamental attribution error, projection bias, and ...
Thinking, Fast and Slow is a 2011 popular science book by psychologist Daniel Kahneman.The book's main thesis is a differentiation between two modes of thought: "System 1" is fast, instinctive and emotional; "System 2" is slower, more deliberative, and more logical.