Loss Aversion

This research examines the influence of key psychological factors on real estate investment trends in India during the post-COVID-19 period. The study aims to understand how behavioural biases shape investor decision-making in a developing real estate market recovering from an unprecedented global crisis. A cross-sectional and quantitative research design was adopted to investigate the proposed relationships between psychological variables and investment trends. Primary data were collected through structured survey questionnaires administered to individual investors actively participating in the Indian real estate market. The collected responses were analysed using Smart-PLS statistical software to test the research hypotheses and assess the strength and significance of the relationships among the constructs. The findings indicate that loss aversion, herd mentality, and overconfidence exert a significant and positive influence on post-pandemic real estate investment trends. These results suggest that investors' emotions, social influences, and self-perceptions play a crucial role in shaping investment behaviour during periods of uncertainty and recovery. In contrast, mental accounting shows a positive but statistically insignificant impact on investment trends, indicating a relatively weaker role in post-pandemic decision-making. Overall, this study contributes to the growing body of literature on behavioural finance by providing empirical evidence from a developing real estate market. It enhances understanding of investor psychology and offers valuable insights for policymakers, market participants, and researchers examining post-pandemic investment behaviour in India.

In this article, we show experimentally that individuals can adapt their decision-making to social environments, like markets, and respond strategically to biases, such as regret aversion. We find they can employ herding as a behaviorally rational strategy to improve their expected outcomes and shift anticipated regret when regret would otherwise bias them towards a suboptimal status quo. Herding can improve decision-making when people observe the choices of professionals and businesses, who are less likely to be biased by regret. Focusing on others' choices can allow decision makers to shift their reference point, and their bias, to favor their optimal choice. We find that decision makers exploit this process to shift their bias strategically. They seek information when their reference point is not optimal, but block it otherwise. They also strategically select among different types of decision makers and focus on those that made the better decision. Our research suggests that decision makers employ strategies to reduce the welfare effects of biases in certain domains. Policy responses may support private ordering by seeking to complement, rather than substitute for, these strategies.

We consider a game between a fixed set of firms that participate in a series of procurement auctions over an infinite horizon, where bids are publicly observed and each firm receives a privately observed cost shock in each period. Although cost shocks are ...

Immersive virtual reality environments, collectively called the metaverse, have become increasingly prominent across research and commercial domains. The accelerating significance of the metaverse makes it imperative to study the characteristics of performing immersive virtual reality tasks. The current study focuses on heuristics and biasesspecifically, the manifestation of the endowment effectwithin executive functions when individuals are involved in an immersive virtual reality task. We hypothesize that the endowment effect will be found within executive functions in an immersive virtual reality assembly task, and that it will be less pronounced when the environment is more spatially complex. We used three different virtual immersive environments to study the endowment effect: the firstone virtual world, the secondtwo virtual worlds, and the third four virtual worlds. Participants' task was to assemble models located in these environments. Half of them (sellers) could sell a system-given advantage that helped them during the assembly, and half (buyers) could buy it. In the first phase (training), the advantage was assigned randomly to half of the participants, and all participants performed half of the assembly task. After training, participants having the advantage could sell it to their partner, following which they performed the second half of the assembly task in the test phase. The results demonstrate the existence of the endowment effect for all groups in a similar manner, and over-estimation of the advantage by both sellers and buyers. This is an essential contribution to the field of heuristics and biases in virtual reality tasks.

The large spread between equity returns and risk free rates observed in most stock markets (the "equity premium puzzle") has been subject of intense debates. Two main families of models claim to solve this puzzle: habit formation models and loss aversion models. The goal of this paper is to assess empirically which of them …ts the observed excess returns best. For that, I …rst show how to express both models in the same form, namely as linear stochastic discount factor models. This form has the main advantage to give explicit and testable constraints for the excess return dynamic. I then compare the theoretical dynamic generated by these models with the observed dynamic. I …nd that the external habit model and a loss aversion model with a reference level based on past consumption are not likely to correspond to the observed data. In opposition, a loss aversion model with a reference level based on expected consumption and, to some extend, the internal habit model could …t the observed excess return dynamic.

Financial decision-making constitutes a fundamental aspect of everyday life, whether in the context of selecting investment strategies and financial assets, applying for loans, or purchasing consumer goods. Classical economic theories have traditionally assumed that individuals act rationally and make decisions based on objective evaluations of available information. However, extensive psychological research has demonstrated that human behavior frequently deviates from strict rationality. Instead, judgments and decisions are often shaped by heuristics and cognitive biases that systematically influence the way individuals process information and evaluate risk.
Heuristics can be understood as mental shortcuts and cognitive strategies that simplify complex decision-making processes. They enable individuals to make rapid judgments in situations characterized by uncertainty, incomplete information, time pressure, or cognitive overload. While heuristics frequently facilitate efficient and adaptive decision-making, they may also lead to systematic distortions in judgment and perception, commonly referred to as cognitive biases.
The present paper aims to systematically examine the extent to which specific heuristics; particularly the availability heuristic and anchoring heuristic, as well as cognitive biases such as confirmation bias and the disposition effect, influence financial decision-making. To achieve this objective, the study first establishes a theoretical framework outlining the relevant psychological concepts and their implications for financial behavior. Subsequently, prior empirical research is reviewed in order to demonstrate how these cognitive processes manifest in real-world financial contexts.
In order to establish a contemporary practical perspective, a semi-structured interview was conducted with a user of a widely utilized online trading platform. The interview aimed to identify potential cognitive biases emerging during the use of such platforms, assess the interviewee’s awareness of these effects, and explore possible strategies employed to mitigate them. The interview findings were analyzed qualitatively and interpreted within the broader context of existing behavioral finance research.
Finally, the paper discusses practical approaches for reducing the negative effects of heuristics and cognitive biases in financial decision-making. By doing so, the study contributes to a more comprehensive understanding of the psychological mechanisms underlying financial behavior.

This paper investigates how cognitive heuristics, prospect-theoretic biases and discrete emotional states combine to form an underlying investor psychology that, in turn, influences individual investment decisions and contributes to the persistence of market anomalies. Motivated by gaps in behavioralfinance literature regarding the intermediary role of psychological dispositions, we propose and empirically test a mediated model linking Heuristic Biases (HU), Prospect Bias (PB), and Emotions (EM) to Investment Decision-making (ID) via Investor Psychology (IP). Primary data were collected from 321 active retail investors in three districts of Chhattisgarh, India, using a validated bilingual questionnaire. Partial Least Squares Structural Equation Modeling (PLS-SEM) with 5,000 bootstrap resamples was used to evaluate measurement quality and structural relations. Results show that heuristics exert the strongest influence on investor psychology (β = 0.60, p<.001) and a substantial direct effect on investment decisions (β = 0.30, p<.001). Emotions affect decisions both directly (β = 0.20, p<.05) and indirectly through psychology (indirect β = 0.12, 95% CI [0.05, 0.20]). Prospect bias has a direct but smaller effect on decision-making (β = 0.25, p<.01) and a non-significant indirect effect via psychology. The proposed mediated pathways explain substantial variance in outcomes (R²_IP = 0.60; R²_ID = 0.50). We discuss theoretical implications for behavioral finance, practical interventions for investor education and platform design, and limitations including regional sampling and cross-sectional data.

The efforts to identify behavioral biases displayed by individual investors still continue. In addition to it, detecting these biases has also importance in behavioural finance domain. Through individuals' statements, produced from a previous in-depth interview study, this paper aims to explore whether those statements represent the denominated behavioral biases (i.e., preference for certainty, confirmation bias, consultancy bias, overconfidence bias, regret avoidance, loss aversion) as they are supposed to be and to observe whether those biases are related to individuals' risky investment behavior. We conducted exploratory factor and correlation analysis through the data of 107 individuals. Factor analysis results indicated that those statements represented their respective behavioral biases well. Correlation analysis showed that preference for certainty and loss aversion had a negative association with risky investment behavior, enabling that the relation between these two biases and risky investment behavior makes sense as expected. Managerial implications and research limitations were also discussed.

We present a bi-dimensional multi lottery choice task which can be used in order to elicit the agents' risk attitudes in financial environments. This task is implemented both with hypothetical and real monetary incentives in a between-subjects and a withinsubjects experiment. We observe choices involving significantly lower risk aversion on aggregate when incentives are real. The differences grow with the stakes at play. We also obtain significant differences between hypothetical and real rewards in both utility weighting and probability weighting estimated parameters. We find that the use of hypothetical incentives in multi-lottery choice tasks for evaluating individual risk aversion can be misleading. Presentamos una lotería múltiple bidimensional que puede utilizarse para elicitar la actitud frente al riesgo en entornos financieros. Esta tarea fue implementada en dos tratamientos: entre e intra-sujetos, tanto bajo incentivos monetarios hipotéticos como reales. Observamos que los sujetos son significativamente menos adversos al riesgo cuando los incentivos que se les ofrecen son reales. Estas diferencias aumentan con la cuantía de los pagos en juego. También obtenemos diferencias significativas entre incentivos hipotéticos y reales en los parámetros estimados de ponderación de la utilidad y de ponderación de la probabilidad. El uso de incentivos hipotéticos para la evaluación de los niveles individuales de aversión al riesgo puede llevar a resultados engañosos.

If the world is free, you can pursue maximum of your objective at will. But you live in a world of limited resources, so Lagrange Mathematics helps you attain the constrained maximum. This paper reveals many contradictions: constrained maximum has no constraint; cost is not just negative; indifference curve and cost line are usually not tangent; a tangency may actually be an intersection; a higher utility may imply lower welfare; MRS=ERS is not optimal; etc. Perhaps, you have misunderstood the word “free”. It does not mean free of charge, but means that you are free to hire any optimal amount of input, as long as you pay the input price (including interest cost). So there is no constraint, whatsoever. This paper topples the Lagrange kingdom in Economics.

This study aims to explore the experiences of college students as novice investors in understanding risk and uncertainty in the Indonesian stock market. The increasing participation of young investors, particularly college students, is driven by easy access to digital investment platforms and the dissemination of financial knowledge through social media. However, the volatile and uncertain nature of the stock market significantly influences their investment decision-making patterns. A qualitative approach using a phenomenological method was applied to capture the subjective experiences of these student investors. Data were collected through in-depth interviews with students who had been investing for at least six months. The findings indicate that students view risk not only as the possibility of financial loss but also as part of the learning process. Emotional responses such as fear, anxiety, and overconfidence also shape their investment decisions. Additionally, herd behavior is frequently observed among novice investors. This study enriches the field of behavioral finance by highlighting the psychological dimensions of student investment behavior. Penelitian ini bertujuan untuk mengeksplorasi pengalaman mahasiswa sebagai investor pemula dalam memahami risiko dan ketidakpastian di pasar saham Indonesia. Meningkatnya partisipasi investor muda, khususnya mahasiswa, didorong oleh kemudahan akses ke platform investasi digital dan penyebaran pengetahuan keuangan melalui media sosial. Namun, sifat pasar saham yang fluktuatif dan tidak pasti sangat memengaruhi pola pengambilan keputusan investasi mereka. Pendekatan kualitatif dengan menggunakan metode fenomenologis diterapkan untuk menangkap pengalaman subjektif para investor mahasiswa ini. Data dikumpulkan melalui wawancara mendalam dengan mahasiswa yang telah berinvestasi setidaknya selama enam bulan. Temuan menunjukkan bahwa mahasiswa memandang risiko tidak hanya sebagai kemungkinan kerugian finansial, tetapi juga sebagai bagian dari proses pembelajaran. Respons emosional seperti rasa takut, kecemasan, dan rasa percaya diri yang berlebihan juga membentuk keputusan investasi mereka. Selain itu, perilaku mengikuti arus (herd behavior) sering diamati di kalangan investor pemula. Penelitian ini memperkaya bidang keuangan perilaku dengan menyoroti dimensi psikologis dari perilaku investasi mahasiswa. Kata Kunci: pasar saham; investor pemula; persepsi risiko; fenomenologi; mahasiswa Kemajuan teknologi informasi telah membawa perubahan signifikan dalam perilaku keuangan masyarakat, terutama di kalangan generasi muda. Akses internet yang mudah, ketersediaan berbagai aplikasi investasi digital, serta maraknya konten edukasi keuangan di media sosial telah membuat investasi tidak lagi menjadi domain eksklusif kelompok berpenghasilan tinggi atau para profesional. Saat ini, mahasiswa mulai muncul sebagai bagian dari kelompok investor baru yang secara

This research study used the original Tversky and Kahneman (1992) methodology to establish values of the key prospect theory parameters in samples of Slovakian construction managers and tertiary students. Median sample values for choice tasks with gains elicited in both samples were fairly similar to those established by the Tversky and Kahneman work (1992). When the same estimation techniques and data types are used, the prospect theory parameter values in Slovakian samples seem fairly similar for standard student populations in developed countries. Based on our results we assume that estimation techniques and data types may be more important for determining parameter values than testing environments and gender or experience of participants.

Investment decisions made by individual investors are often influenced by psychological and emotional factors rather than purely rational analysis, which can lead to hesitation, reduced trading activity, and unfavourable investment outcomes. This study is motivated by the observation that such behavioural tendencies contribute to the low participation of individual investors in the Colombo Stock Exchange (CSE), despite the availability of financial information and increasing financial literacy in Sri Lanka. Accordingly, the study investigates the influence of key behavioural biases, such as herding, representativeness, overconfidence, regret aversion, and loss aversion, on individual investment decision-making. A cross-sectional research design was employed, and primary data were collected from 358 individual investors using a structured questionnaire distributed through convenience and snowball sampling methods. The data were analysed using multiple linear regression techniques with SPSS to examine the proposed relationships. The results indicate that all selected behavioural biases have a significant and positive influence on investment decision-making, highlighting the critical role of behavioural factors in shaping investor behaviour in an emerging market context. These findings extend the existing behavioural finance literature by providing empirical evidence from Sri Lanka and offer practical implications for policymakers, financial institutions, and investor education programmes aimed at improving decision quality, reducing bias-driven hesitation, and encouraging more active and informed participation in the stock market.

Abstract: In this paper I develop a Prospect theory based model to explain bidding in first-price auctions. As suggested in the literature, bidding occurs in these auctions in an inherently ambiguous environment due to lack of information about bidders ’ risk attitudes and bidding strategies. I show that bidding in first-price auctions can be rationalized as a combination of reactions to underlying ambiguity and anticipated loss aversion. Using data from experimental auctions, I provide evidence that in induced value auctions against human bidders this approach works well. In auctions with prior experience and /or against risk-neutral Nash bidders where ambiguity effects could be altogether irrelevant, anticipated loss aversion by itself can explain aggressive bidding. This is a novel result in the literature. Using data from experiments I find that ambiguity effects become negligible in auctions with prior experience (with loss aversion) against (i) experienced human bidders and (i...

explore the implications of reference-dependent preferences in sealed-bid auctions. In the first part, I develop a Prospect theory based model to explain bidding in first-price auctions. I show that bidding in induced-value first-price sealed-bid auctions can be rationalized as a combination of reactions to underlying ambiguity and anticipated loss aversion. Using data from experimental auctions, I provide evidence that in induced-value auctions with human bidders, this approach works well. In auctions with prior experience and /or against risk-neutral Nash rivals where ambiguity effects could be altogether irrelevant, anticipated loss aversion by itself can explain aggressive bidding. This is a novel result in the literature. Using data from experiments, I find that ambiguity effects become negligible in auctions with experienced human bidders against (i) experienced human rivals and (ii) Nash computer rivals, when loss aversion is taken in consideration. The estimates for loss aversion are similar in auctions with human bidders (with or without experience). I owe immense gratitude to the team of Professors Andreas Lange and John List, who stimulated my interest in behavioral and experimental economics. Both gave me enough freedom to explore my thoughts and believed in my ideas. John List infused a sense of curiosity, excitement and exploration that is great asset to take these research ideas further. Lange guided my discoveries home. I always received great encouragement and support from Professor John Rust. He believed in my ideas and backed them with financial support in the later stages. I consider myself extremely fortunate to find guidance from all of you. I have also benefitted immensely from my interactions with Professors Erkut Ozbay, Lars Olson, Kenneth McConnell and Charles Towe on several occasions. The staff at AREC Liesl Koch (also a very close friend),

The study analyzes the impact of behavioral factors on stock market investment decisions among young investors in Biratnagar. The study examines the relationship between the behavioral factors (anchoring bias, risk propensity, herding behaviour, overconfidence bias), financial literacy and investment decision. The study was based on quantitative research design which used descriptive and explanatory research based on primary data collected among the young investors of stock market. The sample size of study compromised 200 respondents, the data were collected through the survey using the Google Form. The data analysis was performed with use of IBM SPSS Statistics 27 software. The data analysis consisted of demographic analysis, descriptive analysis, reliability tests, correlation analysis and regression analysis. The result of the study shows minimum threshold of reliability for each variable and overall reliability was maintained i.e. greater than 0.70. The study shows a positive relationship among overconfidence bias (β = 0.332, p < 0.001), financial literacy (β = 0.320, p < 0.001), and anchoring bias (β = 0.157, p < 0.05) with investment decision. But in contrast risk propensity (β =-0.011, p > 0.05) and herding behavior (β = 0.060, p > 0.05) shows statistically insignificant relationship with investment decision. The study suggests the young investors are more concerned with cognitive and informational factors making investment decision.

This study examines the impact of loss aversion on investment decisions made by retail investors in Nigeria, taking into account the moderating role of financial knowledge and risk perception. The study contextualizes the results in the sub-Saharan African context and draws comparisons with existing research on South Africa. The study examines how loss aversion, a core concept of prospectus theory, influences investment decisions in an emerging market characterized by unique economic, regulatory, and cultural factors. Quantitative data collected from a sample of Nigerian retail investors is analyzed using regression analysis and ANOVA. Qualitative data collected through interviews complement the quantitative results and provide deeper insights into investors' motivations and experiences. The results confirm the significant impact of loss aversion on investment decisions, with higher loss aversion leading to more conservative investment decisions. Financial knowledge has been shown to play a decisive role in reducing the impact of loss aversion, as financial-savvy investors tend to adopt more aggressive investment behavior. The comparative analysis with South Africa underlines the importance of market-specific factors and suggests that market development, regulatory frameworks and cultural contexts can influence the development of loss aversion. This study contributes to the literature on behavioral finance by providing empirical data from a little-researched emerging market. It provides practical insights to investors, financial advisors, regulators and policy makers in Nigeria and highlights the need for financial knowledge, tailored advice, and robust investor protection mechanisms.

This study examines restricted decumulation options for retirees with Defined Contribution (DC) in Slovenia and shows how these constraints create an implicit tax on accumulated assets. Using the Money's Worth framework, we find that Slovenian annuities offer lower value than comparable products in advanced markets. We develop a utility-based model with loss aversion to quantify welfare losses across eight retiree types, differing in loss aversion, bequest motive, replacement rate, and time preference. Seven out of eight retiree types achieve higher utility under currently unavailable strategies. We introduce the Implicit Tax on DC Assets to capture the opportunity cost of restricted product availability.

This paper provides a comprehensive analysis regarding strategic interaction under expectation-based loss-aversion. First, we develop a coherent framework for the analysis by extending the equilibrium concepts of Kőszegi and to strategic interaction and demonstrate how to derive equilibria. Second, we delineate how expectation-based loss-averse players differ in their strategic behavior from their counterparts with standard expected-utility preferences. Third, we analyze equilibrium play under expectation-based loss aversion and comment on the existence of equilibria.

This study provides a comprehensive analysis of the behavioural biases influencing Generation Z and Millennial investors, emphasizing their distinct risk perceptions and financial decisions in contemporary markets. In contrast to traditional investors, these generations exhibit significant digital exposure, reliance on FinTech platforms, and heightened social influence, which amplify cognitive and emotional biases. The paper highlights key biases such as overconfidence, herding, loss aversion, anchoring, confirmation bias, disposition effect, and mental accounting, examining their impact on portfolio decisions, trading frequency, and long-term investing success. The influence of social media, gamification in investment applications, and peer-based financial communities on altering risk perceptions is particularly noteworthy. Evidence suggests that while younger investors exhibit a greater propensity for adopting novel financial products and demonstrate higher risk tolerance, they remain significantly susceptible to behavioural biases that may distort rational decision-making. This research contributes to the growing body of literature on behavioural finance by synthesizing evidence regarding investment psychology across generations and offers implications for policymakers, educators, and financial institutions to formulate targeted interventions that foster informed and resilient investing behaviours among future generations.

Decisions. This study uses non-probability sampling techniques to as many as 163 investors stock in Yogyakarta as respondents. Findings/Results: the study shows that overconfidence, loss aversion and herding bias have a significant effect on investment decisions and overconfidence, loss aversion and herding bias are not mediated by financial literacy in making investment decisions.

Before We Begin This paper applies formal game theory to the dynamics of my own family system. It is a strange thing to do. It is also, I would argue, a useful thing to do. The central claim is that what feels like a trap is actually a trap in a precise mathematical sense: a Nash equilibrium, meaning a configuration where no one can unilaterally improve their situation by changing their behaviour alone. Making that claim formally means it can be examined, stress-tested, and argued with rather than simply felt.

This paper applies non-cooperative game theory to analyze the strategic structure of a family system under conditions of financial dependency, asymmetric power, and contested educational choice. Three coupled games are formally specified: a dependency-autonomy game (G₁) governing the funding-exit interaction; an intellectual recognition signaling game (G₂); and a repeated compliance game (G₃) in which integrity costs accumulate under financial dependency. The analysis is extended to incorporate three educational trajectories: an international research MSc at the University of Amsterdam (Strategy A), medical school leading to psychiatry (Strategy M), and clinical-psychotherapeutic training in Athens (Strategy T). national scale. Principal findings: (i) Amsterdam dominates under all plausible parameterizations; (ii) medicine compounds compliance costs by a factor of approximately five over a decade; (iii) the phantasmatic premium φ sustains compliance beyond strategic rationality; (iv) three independent mechanisms-strategic, libidinal, and prospect-theoretic-jointly sustain the trap's stability; (v) antifragile positioning, not merely capability restoration, is the normative target for post-trap strategy.

Prior literature suggests that the zero-earnings discontinuity is caused by earnings management. This makes sense if investors are naïve. We test for the possibility of investor naïveté and find that they are aware of firms performing earnings management around zero reported earnings and that there is no obvious gain of reaching zero reported earnings. We extend a signaling model to include loss-averse investors and we find that earnings management is not only rational, but in equilibrium, it is not possible for investors to deduce the correct value of firms' earnings around the discontinuity. Assuming our model generates the observed data, a loss-aversion coefficient of 1.2595 matches the discontinuity below zero reported earnings observed in the data simulated from the model and in the actual data. This loss-aversion coefficient is consistent with Tversky and Kahneman (1992), who find that losses are weighted roughly twice as heavily as gains.

Prior literature suggests that the zero-earnings discontinuity is caused by earnings management. This makes sense if investors are naïve. We test for the possibility of investor naïveté and find that they are aware of firms performing earnings management around zero reported earnings and that there is no obvious gain of reaching zero reported earnings. We extend a signaling model to include loss-averse investors and we find that earnings management is not only rational, but in equilibrium, it is not possible for investors to deduce the correct value of firms' earnings around the discontinuity. Assuming our model generates the observed data, a loss-aversion coefficient of 1.2595 matches the discontinuity below zero reported earnings observed in the data simulated from the model and in the actual data. This loss-aversion coefficient is consistent with Tversky and Kahneman (1992), who find that losses are weighted roughly twice as heavily as gains.

This applied case study maps the pricing architecture of a 9-tool AI-powered dissertation diagnostic pack to seven established principles from the psychology of judgment and decision making: anchoring (Tversky & Kahneman, 1974), framing (Tversky & Kahneman, 1981), default effects (Thaler & Sunstein, 2008), decoy/compromise effects (Huber et al., 1982; Simonson, 1989), social norms in pay-what-you-want pricing (Gneezy et al., 2010; 2012), loss aversion (Kahneman & Tversky, 1979), and bundling via mental accounting (Thaler, 1985). A 6-tier bundle architecture (£9–£99) is engineered to make the £69 Pro Pack the modal purchase using all seven principles in sequence. The strategy is further analysed through Cialdini's (2001; 2021) seven principles of influence, Michie et al.'s (2011) COM-B behaviour change model (scoring 48/50 across five applicable subcomponents), and Higgins' (1997) regulatory focus theory. Ethical analysis addresses the nudge-sludge boundary (Thaler, 2018; Rebonato, 2012), and a practitioner-as-analyst limitation is acknowledged. A pilot test framework (N=20–50) with predicted outcomes and extended measures is included for empirical validation. No sales data are reported.

This applied case study maps the pricing architecture of an AI-powered dissertation tool to seven established principles from the psychology of judgment and decision making: anchoring (Tversky & Kahneman, 1974), framing (Kahneman & Tversky, 1981), default effects (Thaler & Sunstein, 2008), decoy/compromise effects (Huber et al., 1982; Simonson, 1989), social norms in pay-what-you-want pricing (Gneezy et al., 2010), loss aversion (Kahneman & Tversky, 1979), and bundling via mental accounting (Thaler, 1985). The strategy is further analysed through Cialdini's (2001; 2021) seven principles of influence, Michie et al.'s (2011) COM-B behaviour change model (scoring 48/50), and Higgins' (1997) regulatory focus theory. A 6-tier bundle architecture (£9–£99) is designed to make the £69 Pro Pack the modal purchase. Ethical analysis addresses the nudge-sludge boundary, and a practitioner-as-analyst limitation is acknowledged. A pilot test framework (N=20–50) is included for empirical validation.

This research study used the original Tversky and Kahneman (1992) methodology to establish values of the key prospect theory parameters in samples of Slovakian construction managers and tertiary students. Median sample values for choice tasks with gains elicited in both samples were fairly similar to those established by the Tversky and Kahneman work (1992). When the same estimation techniques and data types are used, the prospect theory parameter values in Slovakian samples seem fairly similar for standard student populations in developed countries. Based on our results we assume that estimation techniques and data types may be more important for determining parameter values than testing environments and gender or experience of participants.

This study examines the influence of behavioral biases on retail forex trading performance using a structured dataset of 500 simulated trades. The research integrates behavioral finance theory with empirical-style analysis to explore how emotions, risk management, and trader characteristics affect outcomes. The findings suggest that psychological biases significantly reduce trading efficiency and consistency.

Sleep deprivation alters decision making; however, it is unclear what specific cognitive processes are modified to drive altered choices. In this manuscript, we examined how one night of total sleep deprivation (TSD) alters economic decision making. We specifically examined changes in uncertainty preferences dissociably from changes in the strategy with which participants engage with presented choice information. With high test-retest reliability, we show that TSD does not alter uncertainty preferences or loss aversion. Rather, TSD alters the information the participants rely upon to make their choices. Utilizing a choice strategy metric which contrasts the influence of maximizing and satisficing information on choice behavior, we find that TSD alters the relative reliance on maximizing information and satisficing information, in the gains domain. This alteration is the result of participants both decreasing their reliance on cognitively-complex maximizing information and a concomit...

People choose differently when facing potential gains than when facing potential losses. Clear gross differences in decision making between gains and losses have been empirically demonstrated in numerous studies (e.g. framing effect, risk preference, loss aversion). However, theories maintain that there are strong underlying connections (e.g. reflection effect). We investigated the relationship between gains and losses decision making, examining risk preferences and choice strategies (the reliance on option information) using a monetary gamble task with interleaved trials. For risk preferences, participants were on average risk averse in the gains domain and risk neutral/seeking in the losses domain. We specifically tested for a theoretically hypothesized correlation between individual risk preferences across the gains and losses domains (the reflection effect), but found no significant relationship in the predicted direction. Interestingly, despite the lack of reflected risk prefer...

Sleep deprivation alters decision making; however, it is unclear what specific cognitive processes are modified to drive altered choices. In this manuscript, we examined how one night of total sleep deprivation (TSD) alters economic decision making. We specifically examined changes in uncertainty preferences dissociably from changes in the strategy with which participants engage with presented choice information. With high test-retest reliability, we show that TSD does not alter uncertainty preferences or loss aversion. Rather, TSD alters the information the participants rely upon to make their choices. Utilizing a choice strategy metric which contrasts the influence of maximizing and satisficing information on choice behavior, we find that TSD alters the relative reliance on maximizing information and satisficing information, in the gains domain. This alteration is the result of participants both decreasing their reliance on cognitively-complex maximizing information and a concomitant increase in the use of readily-available satisficing information. TSD did not result in a decrease in overall information use in either domain. These results show that sleep deprivation alters decision making by altering the informational strategies that participants employ, without altering their preferences.

We investigated how adult aging specifically alters economic decision-making, focusing on examining alterations in uncertainty preferences (willingness to gamble) and choice strategies (what gamble information influences choices) within both the gains and losses domains. Within each domain, participants chose between certain monetary outcomes and gambles with uncertain outcomes. We examined preferences by quantifying how uncertainty modulates choice behavior as if altering the subjective valuation of gambles. We explored age-related preferences for two types of uncertainty, risk, and ambiguity. Additionally, we explored how aging may alter what information participants utilize to make their choices by comparing the relative utilization of maximizing and satisficing information types through a choice strategy metric. Maximizing information was the ratio of the expected value of the two options, while satisficing information was the probability of winning. We found age-related alterations of economic preferences within the losses domain, but no alterations within the gains domain. Older adults (OA; 61-80 years old) were significantly more uncertainty averse for both risky and ambiguous choices. OA also exhibited choice strategies with decreased use of maximizing information. Within OA, we found a significant correlation between risk preferences and choice strategy. This linkage between preferences and strategy appears to derive from a convergence to risk neutrality driven by greater use of the effortful maximizing strategy. As utility maximization and value maximization intersect at risk neutrality, this result suggests that OA are exhibiting a relationship between enhanced rationality and enhanced value maximization. While there was variability in economic decision-making measures within OA, these individual differences were unrelated to variability within examined measures of cognitive ability. Our results demonstrate that aging alters economic decision-making for losses through changes in both individual preferences and the strategies individuals employ.

Behavioral finance seeks to clarify and enhance the comprehension of investors' reasoning patterns, taking into account the emotional aspects involved and how significantly they impact the decisionmaking process. Behavioral finance attempts to narrow the gap between cognitive psychology and neo classical finance. It evaluates the investor's behavior and decision-making process, enabling it to explain the observed variances from conventional finance theory. Behavioral finance adds behavioral aspects in standard theories of finance while making decision making. It combines the theory of both behavior and cognitive psychology with the conventional finance and economic which helps to explain why people make irrational decision related with the finance. Behavioral biases refer to the tendency that an individual would make some systematic error in a certain circumstance based on cognitive factors rather than evidence. The present study has been conducted by the researchers in order to know the effect of loss aversion and herd behavior bias on the investment decision of Chartered Accountants and Advocates of Tinsukia district of Assam. Proportional stratified random sampling has been employed in order to choose sample from the population. The data through the help of questionnaire were collected from 269 respondents. Simple linear regression was used to know the effect of independent variable (Loss aversion and herd behavior bias) on the dependent variable (investment decision making). The study found that chartered accountants in the study area are negatively affected by loss aversion bias and herd behavior bias. On the other hand advocates are positively affected by loss aversion bias and herd behavior bias.

We study behavior in a search experiment where sellers receive randomized bids from a computer. At any time, sellers can accept the highest standing bid or ask for another bid at positive costs. We find that sellers stop searching earlier than theoretically optimal. Inducing a mild form of time pressure strengthens this finding in the early periods. There are marked gender differences. Men search significantly shorter than women. If subjects search in groups of two subjects, there is no difference to individual search, but teams of two women search much longer than men and recall more frequently.

This thesis shows that while macro variables and default rates share common cycles for conventional US mortgages, a unique cycle is observed for loss given default, implying that the relation between the default rate and loss given default is weak for conventional US mortgages. The average loss given default across the US increases from 2002 until the end of the data set in 2014. Similar increases are observed across the U.S. Census Bureau’s defined regions, although the West region shows losses that seem impacted by the financial crisis of 2007-2008. The research finds evidence of a unique cycle for loss given default across the US as well as for specific regions, moreover this cycle is also present for uninsured mortgage loans with a high enough loan to value at origination ratio. The research uses a mixed-measurement dynamic factor model that applies a mixture of gaussians to capture the dynamics of a bimodal loss given default distribution. The finding of a unique loss given def...

A macroeconomic model is developed in which the psychological concept of loss aversion is incorporated into workers' preferences. The impact of monetary policy in the presence of loss aversion depends on the specification of the reference wage. The plausible specification that a worker's reference wage is the real wage she was paid in the previous period is considered in detail. Specifying the reference wage in this way, we show that an unanticipated change in monetary policy has a permanent, real effect when short term labour contracts are written in nominal wages.

A macroeconomic model is developed in which the psychological concept of loss aversion is incorporated into workers’ preferences. The impact of monetary policy in the presence of loss aversion depends on the specification of the reference wage. The plausible specification that a worker’s reference wage is the real wage she was paid in the previous period is considered in detail. Specifying the reference wage in this way, we show that an unanticipated change in monetary policy has a permanent, real effect when short term labour contracts are written in nominal wages.

The purpose of this study is to investigate the influence of behavioral biases, overconfidence and loss aversion on the decision making behavior of individual equity investor by considering the risk perception as mediator. The results of the study are helpful for policy makers, financial advisors, equity investors, finance teachers, and finance students. The individual equity investor knows which bias is interrupting his decision making process, and who is reducing these biases and making their decision making level stronger. Data was collected through convenient sampling using questionnaires. The respondents were the investors of Islamabad stock exchange, brokerage houses and bankers. 250 questionnaires were distributed of which 160 were returned, making the response rate approximately 64% percent. The result indicated that investors are affected by overconfidence and loss aversion bias. Both biases have a significant impact.

The study "Mind Over Market: How Behavioral Finance Shapes Individual Investment Choices" explores the psychological factors influencing investors' decisions. Unlike traditional financial theories assuming rational decision-making, behavioral finance examines biases such as overconfidence, loss aversion, and herd behavior. These biases often lead individuals to make irrational choices, deviating from optimal financial strategies. By analyzing investor behavior through these lenses, the study highlights the impact of emotions and cognitive errors on market outcomes. The research underscores the importance of understanding these psychological factors to improve investment strategies and promote more rational decision-making in the financial markets. Every human choice is fundamentally influenced by individual perception; hence, psychology significantly impacts all decisions, including those in finance and investment. Behavioral finance is the discipline that examines the influence of psychology on financial decision-making, particularly the cognitive shortcuts and biases individuals possess. In contrast to conventional finance, which is grounded in logic and rationality, behavioral finance takes into account emotions and intuition. In summary, conventional finance pertains to rational thought, while behavioral finance relates to emotional influences.This report examines how people make investing choices. The research examines the origins of judgment and decision-making, along with the associated biases. Do individuals choose for more rational investing options or those influenced by psychological biases. This paper examines the difficulty modern individual investors face in applying the well-established principles of traditional finance theories to their decisionmaking processes, potentially due to psychological barriers or cognitive heuristics. Numerous individual investors prioritize their heuristics above established orthodox ideas, maybe stemming from self-assurance or excessive faith in their heuristics. Investment choices are sometimes driven by the investor's intuition, which may be irrational and may result in losses. Behavioral finance seeks to connect human psychology with financial principles. Nonetheless, it remains in its nascent phase in India, although is rapidly gaining traction. This research will examine the trigger points in the investor decision-making process and seek to comprehend the inconsistencies within neo-classical theories.

This paper diagnoses modern conformism not as moral weakness but as a calculated ontological process: surrender → liquidation → ritualization → modern deism. Loss aversion governs behavior, transforming protest into complaint, agency into position. The subject doesn't betray the system-it evaporates. Ritual identity replaces existential density with repeatable form. Epistemology shifts from knowing to believing; ontology from open becoming to closed inevitability. Society doesn't immoralize; it loses ontological weight.

The discrepancy between willingness to pay (WTP) and willingness to accept (WTA) for a product, referred to as the endowment effect, has been investigated and replicated across various domains because of its implications for rational decision making. The authors assume that implicit processes operate in the endowment effect and propose an explanation that is derived from the two main accounts of the effect, ownership and loss aversion. Based on the implicit egotism and selfaffirmation literatures, the model argues that selling is perceived as an implicit selfthreat and that sellers, as a part of their automatic defense mechanism, respond to this self-threat by enhancing the value of the self-associated object. Five studies test these conjectures and provide support for the proposed model. A part of our depression at the loss of possessions is due to our feeling that we must now go without certain goods that we expected the possessions to bring in their train, yet in every case there remains, over and above this, a sense of the shrinkage of our personality, a partial conversion of ourselves to nothingness, which is a psychological phenomenon by itself. (William James, "The Consciousness of Self," 293) S ince William James's classic work (1890), psycholo- gists have linked the self not only to physical and mental being but also to material possessions (e.g., Belk 1988;. While this stream of research recognizes that intermingling of self and possessions influences how a possession is viewed (Beggan 1992), the endowment effect literature that examines how people value