Decision making for others: the case of loss aversion

Sascha C. Füllbrunn, Wolfgang J. Luhan

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    Abstract

    Risky decisions are at the core of economic theory. While many of these decisions are taken on behalf of others rather than for oneself, the existing literature finds mixed results on whether people take more or less risk for others then for themselves. Recent studies suggest that taking decisions for others reduces loss aversion, thereby increasing risk taking on behalf of others. To test this, we elicit loss aversion in three treatments: making risky decisions for oneself, for one other subject, or for the decision maker and another person combined. We find a clear treatment effect when making decisions for others but not when making decisions for both.
    Original languageEnglish
    Pages (from-to)154-156
    Number of pages3
    JournalEconomics Letters
    Volume161
    Early online date18 Oct 2017
    DOIs
    Publication statusPublished - 1 Dec 2017

    Keywords

    • decision making for others
    • risk taking
    • loss aversion
    • experiment

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