scholarly journals Decisions for Others Are Less Risk-Averse in the Gain Frame and Less Risk-Seeking in the Loss Frame Than Decisions for the Self

2017 ◽  
Vol 8 ◽  
Author(s):  
Xiangyi Zhang ◽  
Yi Liu ◽  
Xiyou Chen ◽  
Xuesong Shang ◽  
Yongfang Liu
Keyword(s):  
The Self ◽  
Risk Averse ◽  
Risk Seeking ◽  
Decisions For Others ◽  
Loss Frame ◽  
Gain Frame

Too Much to Lose: The Influence of Emotional Attachment on Risk Aversion

2020 ◽  
Author(s):  
Andy Lisheng Chan
Keyword(s):  
Risk Aversion ◽  
Loss Aversion ◽  
Risk Averse ◽  
Emotional Attachment ◽  
Risk Seeking ◽  
Seeking Behavior ◽  
The Stability ◽  
Loss Frame ◽  
Gain Frame ◽  
Mean Risk

Current literature suggests that the generalizability of the loss aversion hypothesis and in tandem risk aversion and framing effects may be less stable than previously specified. Hence, the current study seeks to investigate emotional attachment as a potential moderator of loss and subsequently risk aversion, helping inform both fields of economics and psychology in driving better policy and decision-making. 64 Temasek Polytechnic students, aged 16-23, were manipulated with either high or low emotional attachment towards an item and presented with an adapted Asian Disease Paradigm (Tversky & Kahneman, 1981) in either a gain or loss frame as a measure of the individual’s mean risk rating. ANOVA analysis revealed the stability of the loss aversion hypothesis identified in past literature – risk-averse behavior increased when a gain frame was presented, and risk-seeking behavior increased when a loss frame was presented. Critically, emotional attachment was found to moderate loss and risk aversion, validating past theoretical derivations (Ariely, Huber, & Wertenbroch, 2005; Novemsky & Kahneman, 2005): when emotional attachment was higher towards an item, participants displayed more risk-seeking behavior and more risk-averse behavior when in the context of losses and gains respectively, and displayed less risk-seeking and risk-averse behavior when they were less emotionally attached to an item in the same context of a gamble. Theoretical and practical implications of these findings are discussed in the context of nudging.

Contagion Effect of Risk Preference under the Loss Frame and Its Potential Mechanism

2020 ◽  
Author(s):  
Deng Pan
Keyword(s):  
Risk Preference ◽  
Framing Effect ◽  
Risk Averse ◽  
Potential Mechanism ◽  
Contagion Effect ◽  
Choice Data ◽  
Human Risk ◽  
Risk Seeking ◽  
Learning From Others ◽  
Loss Frame

Our attitude toward risk plays a crucial role in influencing our everyday decision-making. Studies have found that human risk-preference are susceptible to the frame in which options are presented (“framing effect”) and can be altered by observing and learning from others’ risk-related decisions (“risk contagion effect”). In this study, we seek to found out the effect of contagion in risk preference under the context of loss, using choice data and computational modeling.We demonstrated that individual’s risk-preference can be readily shifted after observing other’s choices, and this contagion effect are considerably stronger after observing a risk-averse agent than a risk-seeking one under the Loss frame. We also found the distance in risk preference between observer and observee positively influenced the degree of risk contagion. Taken together, these findings provide a mechanistic account for how observing others’ risky choices can modulate an individual’s own risk-preference.

How Children Reason about Gains and Losses: Framing Effects in Judgement and Choice

2005 ◽  
Vol 64 (3) ◽  
pp. 153-171 ◽  
Author(s):  
Anne Schlottmann ◽  
Jane Tring
Keyword(s):  
Framing Effects ◽  
Expected Value ◽  
Risk Averse ◽  
Risk Seeking ◽  
Multiplication Rule ◽  
Irregular Pattern ◽  
Value Judgements ◽  
Potential Losses ◽  
Loss Frame ◽  
Gains And Losses

Three experiments considered how the positive or negative framing of decisions affects children’s EV (expected value) judgements and choices. In Experiment 1, 6- and 9-year-olds chose between a sure gain and a gamble or between a sure loss and a gamble, all with the same EV. Children preferred the sure thing more in the positive than negative frame, as also appears for adults. In Experiment 2, both frames involved potential losses. In their judgements, 6- and 9-year-olds used the normative multiplication rule for integrating risk and amount at risk, with minor frame differences, but when choosing between the same options, they were risk-averse in the save, risk-seeking in the loss frame. In Experiment 3, 5-year-olds used multiplication for saves, with an irregular pattern for losses. Overall, children’s judgements conform closely to normativity. At the same time, children’s choices, like adults’, show non-normative framing effects. This décalage may reflect the involvement of more intuitive processes in judgement than choice.

Loyalty program in Africa: risk-seeking and risk-averse adventurers

2014 ◽  
Vol 69 (2) ◽  
pp. 137-157 ◽  
Author(s):  
Shogo Mlozi
Keyword(s):  
Consumer Behavior ◽  
Consumer Products ◽  
Loyalty Programs ◽  
Risk Averse ◽  
Loyalty Program ◽  
Content Type ◽  
Risk Seeking ◽  
Proposed Model ◽  
First Time ◽  
The Relationship

Purpose – This article aims to test the relationship between expected attractiveness-satisfaction-loyalty for international adventure tourists visiting Tanzania. The proposed model is based on travel consumer behavior theoretical constructs extracted from the literature. Design/methodology/approach – This article aims to test the relationship between expected attractiveness-satisfaction-loyalty for international adventure tourists visiting Tanzania. The proposed model is based on travel consumer behavior theoretical constructs extracted from the literature. Findings – The findings for overall model differed from the moderating factors of high risk, low risk, first-time visit and repeat visit. Also, the results are interesting when satisfaction is tested as a mediator. Practical implications – Practitioners could consider the fact that repeat visits may change tourists’ perceptions toward destination and may even increase their inclination to take on risks. This may impact innovation of consumer products in tourism. Also, policy makers could benefit on how loyalty programs can be developed to increase performance. Originality/value – The study offers specific strategic recommendations toward different groups of tourists (i.e. first-time, repeat visitors, risk averse, risk seeking) and proposes logic for setting up a loyalty program as a long-term strategy for success.

Adversarial Risk Analysis for Auctions Using Mirror Equilibrium and Bayes Nash Equilibrium

2021 ◽  
Author(s):  
Muhammad Ejaz ◽  
Stephen Joe ◽  
Chaitanya Joshi
Keyword(s):  
Nash Equilibrium ◽  
Risk Analysis ◽  
Equilibrium Solution ◽  
Risk Averse ◽  
Prior Work ◽  
Reserve Price ◽  
Solution Concepts ◽  
Risk Seeking ◽  
Sealed Bid ◽  
Sealed Bid Auctions

In this paper, we use the adversarial risk analysis (ARA) methodology to model first-price sealed-bid auctions under quite realistic assumptions. We extend prior work to find ARA solutions for mirror equilibrium and Bayes Nash equilibrium solution concepts, not only for risk-neutral but also for risk-averse and risk-seeking bidders. We also consider bidders having different wealth and assume that the auctioned item has a reserve price.

The effects of personal experience on choice-based preferences for wildfire protection programs

2013 ◽  
Vol 22 (2) ◽  
pp. 234 ◽  
Author(s):  
Thomas P. Holmes ◽  
Armando González-Cabán ◽  
John Loomis ◽  
José Sánchez
Keyword(s):  
Willingness To Pay ◽  
Personal Experience ◽  
Choice Experiment ◽  
Prior Experience ◽  
Preference Heterogeneity ◽  
Risk Averse ◽  
Risk Seeking ◽  
Economic Rationale ◽  
Trade Offs ◽  
Risk Loss

In this paper, we investigate homeowner preferences and willingness to pay for wildfire protection programs using a choice experiment with three attributes: risk, loss and cost. Preference heterogeneity among survey respondents was examined using three econometric models and risk preferences were evaluated by comparing willingness to pay for wildfire protection programs against expected monetary losses. The results showed that while nearly all respondents had risk seeking preferences, a small segment of respondents were risk neutral or risk averse. Only respondents who had personal experience with the effects of wildfire consistently made trade-offs among risk, loss and cost and these respondents were willing to pay more for wildfire protection programs than were respondents without prior experience of the effects of wildfire. The degree to which people with prior experience with the effects of wildfire can effectively articulate an economic rationale for investing in wildfire protection to other members of their own or other communities facing the threat of wildfires may influence the overall success of wildfire protection programs.

Nitrogen-Fixing Winter Cover Crops and Production Risk: A Case Study for No-Tillage Corn

1998 ◽  
Vol 30 (1) ◽  
pp. 163-174 ◽  
Author(s):  
James A. Larson ◽  
Roland K. Roberts ◽  
Donald D. Tyler ◽  
Bob N. Duck ◽  
Stephen P. Slinsky
Keyword(s):  
Cover Crops ◽  
Stochastic Dominance ◽  
Nitrogen Fertilization ◽  
Risk Averse ◽  
Production Risk ◽  
Risk Seeking ◽  
Wide Range ◽  
Seeking Behavior ◽  
Net Revenue ◽  
Applied Nitrogen

AbstractWinter legumes can substitute for applied nitrogen fertilization of corn. Stochastic dominance was used to order net revenues from legume and applied nitrogen alternatives. Stochastic dominance orderings indicate that systems combining vetch with low applied nitrogen fertilization (50 and 100 pounds/acre, respectively) were risk inefficient. By contrast, vetch and 150 pounds/acre applied nitrogen maximized expected net revenue and was risk efficient for a wide range of risk-averse and risk-seeking behavior. Farmers with these risk attitudes may not reduce applied nitrogen if they switch to a vetch cover. Extremely risk-averse or risk-seeking farmers would not prefer winter legumes.

STOCHASTIC DOMINANCE AND BEHAVIOR TOWARDS RISK: THE MARKET FOR ISHARES

2012 ◽  
Vol 07 (01) ◽  
pp. 1250005 ◽  
Author(s):  
DOMINIC GASBARRO ◽  
WING-KEUNG WONG ◽  
J. KENTON ZUMWALT
Keyword(s):  
Stochastic Dominance ◽  
Utility Functions ◽  
Investor Behavior ◽  
Risk Averse ◽  
Risk Seeking ◽  
Bull Markets ◽  
Seeking Behavior ◽  
Return Distributions ◽  
And Behavior ◽  
Positive Return

Prospect theory suggests that risk seeking can occur when investors face losses and thus an S-shaped utility function can be useful in explaining investor behavior. Using stochastic dominance procedures, Post and Levy (2015) find evidence of reverse S-shaped utility functions. This is consistent with investors exhibiting risk-seeking tendencies in bull markets and risk aversion in bear markets. We use both ascending and descending stochastic dominance procedures to test for risk-averse and risk-seeking behavior. By partitioning iShares' return distributions into negative and positive return regions, we find evidence of all four utility functions: concave, convex, S-shaped and reverse S-shaped.

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