Loss Aversion in the Laboratory
13 Pages Posted: 19 Jul 2014
We report the results of a laboratory experiment testing for the existence of loss aversion in a standard risk aversion protocol (Holt and Laury, 2002). In our experiment, participants earn and retain money for a week before using it in an incentivized risk preference elicitation task. We find loss aversion, distinct from risk aversion, has a significant effect on behavior resulting in participants requiring higher compensation to bear risk.
Keywords: risk aversion, loss aversion, experiments
JEL Classification: C91, D91
Suggested Citation: Suggested Citation