No Evidence for Loss Aversion Disappearance and Reversal in Walasek and Stewart (2015)

Quentin André*, Bart de Langhe

*Autor corresponent d’aquest treball

    Producció científica: Article en revista indexadaArticleAvaluat per experts

    7 Cites (Scopus)

    Resum

    Loss aversion—the idea that losses loom larger than equivalent gains—is one of the most important ideas in Behavioral Economics. In an influential article published in the Journal of Experimental Psychology: General, Walasek and Stewart (2015) test an implication of decision by sampling theory: Loss aversion can disappear, and even reverse, depending on the distribution of gains and losses people have encountered. In this article, we show that the pattern of results reported in Walasek and Stewart (2015) should not be taken as evidence that loss aversion can disappear and reverse, or that decision by sampling is the origin of loss aversion. It emerges because the estimates of loss aversion are computed on different lotteries in different conditions. In other words, the experimental paradigm violates measurement invariance, and is invalid. We show that analyzing only the subset of lotteries that are common across conditions eliminates the pattern of results. We note that other recently published articles use similar experimental designs, and we discuss general implications for empirical examinations of utility functions.

    Idioma originalAnglès
    Pàgines (de-a)2659-2665
    Nombre de pàgines7
    RevistaJournal of Experimental Psychology: General
    Volum150
    Número12
    DOIs
    Estat de la publicacióPublicada - 2021

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