Are People Really Risk Seeking When Facing Losses?

An experiment and operational subjective Bayesian statistical methods are used to investigate the relation between risk attitudes in the loss domain and framing effects. We find that subjects avoid pure increases in risk when such risks are transparent, that there is little or no correlation between risk attitudes in frames that alternately mask and make transparent pure increases in risk, and that analysing risk attitudes when prospects are presented as lists of prizes and probabilites overstates the likelihood of risk seeking in the loss domain. In general GEUT fails to predict better than a naive theory holding a uniform prior and Bayesian updating. The one exception is in a frame (viewed marginally) where costs of acquiring and processing information are low.


Issue Date:
Dec 01 1994
Publication Type:
Working or Discussion Paper
Language:
English
Total Pages:
38
Series Statement:
9407




 Record created 2017-09-29, last modified 2017-09-29

Fulltext:
Download fulltext
PDF

Rate this document:

Rate this document:
1
2
3
 
(Not yet reviewed)