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This paper examines the predictions of expectations-based reference-dependent models for risk-apportionment tasks that elicit higher-order risk attitudes. We consider some of the most commonly used specifications of Kőszegi and Rabin (2006, 2007) and disappointment aversion models. Our analysis reveals that higher order risky choices exhibited by decision makers defined by those model specifications depend on whether risks to be apportioned in these tasks are symmetric or asymmetric, whether they include small probability outcomes, and on the level of loss aversion. We highlight that some of the predicted choice behaviour in the risk-apportionment tasks differs from the ones in alternative models of decision under risk. We employ experimental data to examine whether choice patterns in the risk apportionment tasks are in line with the predictions of the model specifications described here. We find that only a small proportion of them are consistent with those predictions. [ABSTRACT FROM AUTHOR]

The status-quo bias (SQB) is the tendency to stick with the current situation despite potential dissatisfaction. In this study, we explore the relationship between SQB and subjective well-being (SWB). We hypothesized that higher SQB may lead to less desirable situations (e.g., unsatisfactory marriage, unwanted job), negatively affecting SWB. We developed and examined a novel index for measuring SQB. Surveying 1,423 Israeli working adults, the index showed strong internal consistency and validity, affirming reliability and construct validity. A significant negative correlation between SQB and three SWB measures was found, with SQB explaining more to SWB variations than subjective health, income, and religion combined. Positive life changes over the past three years have moderated this relationship. Moreover, despite including factors like regret, present bias, loss aversion, and optimism—which correlate with SWB and SQB in opposite directions and, therefore, could nullify our findings—the SQB-SWB correlation remained robust. Furthermore, our SQB measure significantly predicted SWB even when controlling for the negative relationship between the affective component of SWB (i.e., emotions) and SQB, which was demonstrated to operate in reverse causality compared to our hypothesis. In other words, SQB was found to mediate between the affective component and the other components of SWB. By providing evidence of the correlation between SQB and SWB, we introduce a robust SQB measurement tool, and underscore SQB's importance when exploring SWB determinants, suggesting that policy interventions encouraging individuals to overcome barriers to change could be advantageous. [ABSTRACT FROM AUTHOR]

This study evaluates details of a progressive transportation development model, wherein high occupancy vehicle (HOV) lanes are transformed into high-occupancy toll (HOT) lanes. Although the management strategy of HOT lanes has been implemented for many years, the implementation of HOT lanes is limited in many regions, and thus, many people remain unfamiliar with the concept. This study aims to evaluate travelers' willingness to pay for HOT lanes based on a "low application" scenario in Shenzhen, China, wherein some HOV lanes are present and may potentially be transformed into HOT lanes, but not all area residents are aware of their intended purpose. According to the Diffusion of Innovation Theory, we leverage this situation to conduct a survey of perceptions and attitudes toward the HOT lanes and evaluate how these perspectives may translate to HOT lane utilization. We further proposed a hybrid utility and regret model considering the impacts of loss aversion caused by tolls or coordinated carpooling for single occupancy vehicles to explore relationships between travel behavior and surveyed demographic and socio-economic characteristics in the context of HOT lanes in places where they are unfamiliar. A sensitivity analysis is conducted to characterize any apparent changing influences. The results show that the model considering decision regret performs well, especially in the scenario with low tolls. Nearly 80% of travelers are willing to pay tolls for HOT lanes, even with limited prior exposure to the concept. The increased acceptance of HOT lanes can be expected to hurt total toll revenue, which may be triggered by easier access to carpool partners associated with the free pass. The study informs a deeper understanding of travelers' willingness to pay for HOT lanes and helps policy-makers develop differentiated tolling strategies. • The willingness to pay for HOT lanes is studied under the low application. • Loss due to unfamiliarity is integrated with the analysis of willingness to pay. • The willingness to pay supports differentiated spatiotemporal tolling policies. • Nearly 80% of travelers are willing to pay tolls, even with the limited concept. • Reduced travel time has the most significant impact on the HOT lane advantage. [ABSTRACT FROM AUTHOR]

• Expected utility theory is not appropriate for understanding the behavior of low-income farmers. • Lexicographic ordering has the advantages of procedural rationality and the behavioral focus on thresholds. • Lexicographic ordering is readily adaptable to the narrative that low income farmers put safety first. • Focusing on safety does not imply avoidance of variance-increasing techniques. As Richard Day explained, expected utility theory suffers from procedural irrationality. This and other problems are illustrated here in the context of decision-making among low-income farmers. Farmers in developing countries are commonly thought to underinvest in modern techniques because their low incomes make them especially risk averse. In addition to the procedural leap of faith, highly restrictive assumptions are needed to apply expected utility theory to the problem. Nor does expected utility theory, as usually prescribed, fit the narrative of loss aversion. The reader is introduced to a procedurally rational substitute called lexicographic safety first. The model is illustrated for the case of rice fertilization in the Philippines, and policy implications are drawn. To illustrate the potential appeal of lexicographic ordering for other applications involving thresholds, a lexicographic model of rational addiction is also provided. [ABSTRACT FROM AUTHOR]

Using the EU-SILC 2008 module on over-indebtedness and financial exclusion, this paper analyses how perceived future-orientated economic insecurity alters individual self-assessed health (SAH), once controlling for past and current financial situation in a range of European countries. Those effects differ by gender and by country. Our results also suggest that country characteristics explain a larger part of the unknown variability of individual levels of SAH than individual-household characteristics. Thus, our findings might be of help in designing the most effective policies intended to alleviate the individual welfare costs of perceived financial insecurity provoked by upcoming business-cycle downturns. • There is a significant effect of past financial strain on current levels of self-assessed health (scarring effect). • Perceived future-orientated economic insecurity alters individual self-assessed health (loss aversion). • Those effects differ by gender and by country. • Country characteristics explain a larger part of the unknown variability of self-assessed health. • The importance of country characteristics varies by gender, being more relevant for females. [ABSTRACT FROM AUTHOR]

Incorporating the principles of loss aversion psychology within the context of green housing stakeholders – the government, realtors, and residents – this study extends its purview into an evolutionary game model. This model takes into account the consequences of inaction in the absence of government oversight, the additional loss incurred by realtors due to the unmarketable development of green housing, and the psychological loss experienced by residents when their green housing acquisitions fall short of their expectations. To further enrich our analysis, three distinct scenarios are considered for the government: exclusive rewards without penalties, exclusive penalties without rewards, and a combination of both rewards and penalties. The simulation results show that: (1) The initial probability values assigned to the three parties do not significantly impact the long-term stable equilibrium. Interestingly, a higher initial probability value tends to steer all three parties towards selecting the stable equilibrium solution. (2) Within the context of the three reward–penalty​ scenarios, it becomes evident that an increase in the magnitude of government rewards and penalties inclines realtors towards a greater inclination to engage in green housing development. Nonetheless, a balanced approach appears to yield the most favorable results. (3) A sensitivity analysis reveals that a heightened aversion to loss within the government's decision-making process leads to a higher likelihood of regulatory intervention. Conversely, a diminished loss aversion mindset among realtors and residents correlates with an increased propensity for realtors to invest in green housing development, while residents are more inclined to purchase green housing. Finally, corresponding policy implications are given according to the conclusions. [Display omitted] • It incorporates the theory of loss aversion from behavioral economics. • A tripartite evolutionary game model of green housing stakeholders is constructed. • The study considers both government propaganda and regulatory behavior. • Constructing evolutionary games and simulations in three government scenarios. • The study compares the Nash equilibrium points under different regulatory modes. [ABSTRACT FROM AUTHOR]

We present novel evidence from a large panel of UK consumers who receive personalized reminders from a specialist price-comparison website about the precise amount they could save by switching to their best-suited alternative mobile telephony plan. We document three phenomena. First, even self-registered consumers with positive savings exhibit inertia. Second, we show that being informed about potential savings has a positive and significant effect on switching. Third, controlling for savings, the effect of incurring overage payments is significant and similar in magnitude to the effect of savings: paying an amount that exceeds the recurrent monthly fee weighs more on the switching decision than being informed that one can save that same amount by switching to a less inclusive plan. We interpret this asymmetric reaction on switching behavior as potential evidence of loss aversion. In other words, when facing complex and recurrent tariff plan choices, consumers care about savings but also seem to be willing to pay upfront fees in order to get "peace of mind". [ABSTRACT FROM AUTHOR]

• We test models combining social and risk preferences. • We test whether agents are socially curious. • Competitive preferences best explain social risk taking. • They can explain social curiosity. We present an experiment providing (a) a horse race among different models combining social preferences and risk preferences, and (b) a test of whether agents are socially curious, that is wanting to know about the risk taking of others and the outcomes of their risk taking. We distinguish outcome driven models (that is, models where agents care about the earning outcomes for themselves and others) from action driven models (that is, models where agents care about one's risk taking actions relative to the actions of others). We embed outcome and action driven competitive preferences, inequality aversion, conformism, and social loss aversion, within a single theoretical framework generalized from Bolton and Ockenfels (2000). We find that competitive preferences models best explain investment decisions in our setting, with almost 50% of subjects influenced both by their co-participants' actions and outcomes. Social information is sought 90% of the times when it is free. When it is costly, it is sought 30% of the times if the information is instrumental for one's own investment decision and 10% to 20% of the times if it is not. Competitive preferences can help explain social curiosity. [ABSTRACT FROM AUTHOR]

Under standard assumptions, costly voting models predict that the supporters of the underdog –i.e., of the candidate that is expected to lose– are less likely to abstain than the supporters of the expected winner (Palfrey and Rosenthal, 1985; Herrera et al., 2014). While some empirical/experimental studies identify this underdog effect (Levine and Palfrey, 2007), in others bandwagons emerge: the supporters of the expected winner are found to abstain less often than the supporters of the underdog (Agranov et al., 2018). We focus on large elections and follow Kőszegi and Rabin(2006, 2007) by considering that voters experience losses, with respect to their expected equilibrium payoffs, more intensely than gains. When the election is sufficiently close (i.e., when the shares of the supporters of the two alternatives are not too asymmetric), we find that bandwagons emerge in every equilibrium. To our knowledge, this is the first formal study that explains bandwagons in large elections, by incorporating a commonly accepted behavioural model in an otherwise standard context of costly voting. [ABSTRACT FROM AUTHOR]

• Comparison of positive and negative conditions of route attributes. • Cyclists would accept detours up to 40% to cycle on preferable routes. • For commuter cyclists, deterrent effects are stronger than motivational effects. • Non-regular cyclists are sensitive to traffic volume and facility separation. Cyclists' route choice is influenced by various route attributes as well as by individual characteristics or the purpose of cycling. Previous studies examined the extent to which those route attributes either motivate or deter to choose a certain route. However, one attribute, e.g. traffic volume, can both motivate and deter depending on the specific level, e.g. high vs. low traffic volume, and the effect of the levels may not be equal. Previous studies usually focused on either the motivational or the deterrent level. This study aims to compare both levels of several attributes, considering also individual factors and different cycling purposes. In an online questionnaire, (N = 169) participants were firstly separated into two trip purpose conditions by instruction (work vs. shopping). They were then presented with two routes representing the motivational and deterrent aspect of one attribute, and were asked for the maximum acceptable travel time for one route given the travel time of the alternative route and vice versa. Results indicate that commuter cyclists are more sensitive to deterrent aspects than to motivational aspects. In general, the gradient and the surface of a route have the highest impact, whereas advisory cycle lanes and traffic lights have the smallest. However, the impact of route attributes was influenced by individual aspects. This study is one of few that examined the impact of various route attributes by considering both the motivational and deterrent level of each attribute. It, thus, exceeds the existing literature by results of these effects and help to obtain a deeper understanding of cyclists' decision to choose or avoid certain routes. [ABSTRACT FROM AUTHOR]

The U.S. Constitution requires the government to pay "just compensation" when it takes property from owners. What compensation is "just"? Perhaps the justice of compensation varies with the perceptions of owners or the perceptions of onlookers not involved in the taking. Research regarding the Bourgeois strategy suggests the hypothesis that the perceptions of just compensation for takings will vary with circumstances such as possession, duration of possession, and multiple occupancy. This preliminary survey of 1262 subjects on the Moral Sense Test website explores conditions that might change perceptions of justice by owners and onlookers. Participants surveyed increase compensation when owners are in possession, when possession lengthens, when there are multiple occupants, and when the land is taken for a project involving substantial private benefits. Survey respondents do not, however, consider justice to require that compensation be increased proportionately for property that is higher in value or that has appreciated over time. Knowing what people perceive to be just compensation is important because failures to achieve justice as commonly perceived could erode confidence in and support for the government and the legal system. [ABSTRACT FROM AUTHOR]

From the perspective of other disciplines, evolutionary approaches more often provide explanation and coherence than they help to solve discrete problems. We believe that more examples of the latter sort will help both with disciplinary synthesis and with the advance of knowledge. Here we describe a 20-year arc of research to demonstrate the problem-solving utility of an evolutionary perspective by focusing, as a case study, on a particular cognitive bias – the endowment effect – that has implications for law. Legal systems often assume that humans make decisions that are substantively rational, consistent, and aimed at maximizing their own wellbeing. But prevalent cognitive biases disrupt this, showing that humans consistently make decisions that seem to violate rationality and/or their own best interests. And despite decades of research, there has been little progress in understanding why these biases exist. We are among the scholars who have converged on the idea that many cognitive biases may have evolved as adaptations to pre-modern conditions, the evolutionarily sudden changes from which often leave them mis-matched to current conditions, prompting us to situationally irrational outcomes. Here, we discuss our data testing hypotheses derived from this perspective in both humans and non-human primates and consider how it has advanced our understanding of both the endowment effect narrowly and cognitive biases generally – including those relevant to law and policy. [ABSTRACT FROM AUTHOR]

In many service industries, information disclosure about the product can alleviate customers' loss aversion induced by uncertain product valuation. In this paper, we consider a single-server queueing system in which the manager who privately learns the valuation information discloses the valuation information strategically to loss-averse customers. We investigate the impact of the customers' loss aversion on the system's equilibrium arrival rate and the manager's optimal disclosure policy. We find that loss aversion restrains customers from joining the queue. Surprisingly, we find that there is no one disclosure policy that always prevails over other disclosure policies. Specifically, the full disclosure policy is optimal only when the valuation is large and the degree of loss aversion is moderate. The full non-disclosure policy is optimal when the degree of loss aversion is too large or too small, or the valuation is small. The threshold disclosure policy is optimal when the valuation and the degree of loss aversion are moderate. Furthermore, under the threshold disclosure policy, the increasing degree of loss aversion makes managers be more reluctant to disclose the valuation. [ABSTRACT FROM AUTHOR]

How does stress influence our decision-making? Although numerous studies have attempted to answer this question, their results have been inconsistent—presumably due to methodological heterogeneity. Drawing on cumulative prospect theory, we examined how acute stress influenced risky decision-making. To this end, we randomly assigned 147 participants to an acute stress induction or control condition and subsequently assessed participants' risky decision-making. We found that stress increased risky decision-making overall, but more importantly, that stress exerted multiple effects on risky decision-making processes that differed between male and female participants. For female participants, relative to the control condition, stress produced a pattern of decision-making characterized by risk seeking with respect to gains, slightly reduced loss aversion, accurate outcome probability assessment, and greater choice stochasticity. For male participants, stress, relative to the control condition, produced to a pattern of decision-making characterized by very low loss aversion and poorer outcome probability assessment. These results suggest that some of the heterogeneity in existing literature may be explainable by task differences in risk type, risk amount, and outcome certainties, and further that these effects will differ by sex. In short, stress changes how we make decisions, and it does so differently by sex. • We examined the influence of a social stressor on risky decision-making processes. • Risky decision-making processes described by cumulative prospect theory were estimated in a hierarchical Bayesian model. • We found that stress exerted strong effects on risky decision-making parameters by sex. • In female participants, stress decreased choice consistency, probability distortion, and both loss and risk aversion. • In male participants, stress decreased loss aversion and increased probability distortion. [ABSTRACT FROM AUTHOR]

Farmers face challenges ranging from fractured landholdings to climate change, yet they often have limited adoption of technology that could help cope with these adversities. As such, understanding farmers' adoption of technology is critical to developing farmer livelihoods in the context of changing global pressures. This research studies the technology and behavior change decisions of farmers in Cambodia through a survey of 109 farmers growing different types of crops and that have a variety of technical change opportunities. The study uses double hurdle modeling with a fractional logistic regression approach and discusses the results in the context of the theory of planned behavior. Results demonstrate that growing rice or cashews, extension services, risk aversion, indebtedness, experiencing crop loss, and having negative perspectives about climate change were positively significantly related to production behavior change while age and owning livestock were negatively significantly related to behavior change. The results suggest that agricultural technology could be made more accessible regardless of production type and developed with special attention towards climate change effect mitigation strategies. • Study builds understanding of farmer decision-making about change and technology adoption in rural Cambodia. • Quantitative survey of 109 farmers analyzed with a double hurdle with fractional logistic model.. • Differentiated adoption behavior between producer groups, with rice and cashew farmers more likely to adopt technology. • Risk averse farmers and farmers concerned with effects of climate change more likely to adopt technology. • Findings provide insights into shaping extension services and equitable technology development. [ABSTRACT FROM AUTHOR]

• Our application of loss aversion theory to user responsiveness has shown that it can effectively reduce uncertainties in users' psychological behaviors. By tailoring incentive schemes, we achieved a reduction in deviations from expected responses, which resulted in a decrease in operational costs by approximately 12 % and enhanced the reliability of building cluster operations by up to 15 %. • Considering the mobility of EVs between buildings, we can guide EVs to participate in demand response through incentives. which has proven to increase the utilization of available resources by 10 % and improve operational reliability by 20 %. This strategic adjustment ensures that electricity demands across buildings are met efficiently, even during varying consumption peaks. • Utilizing the ADMM algorithm, this paper proposes a strategy for optimizing the cooperative operation of building clusters. This strategy led to a reduction in operating costs by 25 % and reduced dependency on external resources, substantiating its effectiveness in resource management across building clusters. • A fraud balance mechanism is established to ensure that all parties achieve fraud balance during cooperation, thereby preventing breakdowns in collaboration due to fraudulent activities. Taking smart building cluster as the research object, this paper proposes an energy sharing optimization strategy for building cluster considering the mobile energy storage properties of electric vehicles. Firstly, the generation rate model of parking space is established by the method of opportunity constraint programming. Aiming at the problem that EV users' participation is easily affected by user psychological factors, user engagement factors are introduced to describe the uncertainty of user psychological factors. In addition, to prevent the cooperation between the smart building cluster and the operator from breaking down due to fraud in the transaction, a fraud-based equalization mechanism is proposed. Finally, the alternating direction method of multipliers with adaptive parameter selection is introduced to solve the formulated problems in a distributed way. Numerical simulation tests show the efficiency of the novel models. [ABSTRACT FROM AUTHOR]

This research delves into a crucial yet often neglected aspect of total carbon emissions—household carbon emissions (HCEs). Utilizing data from the China Household Finance Survey (CHFS), this paper examines the causal relationship between the reference-dependent point for expected income (RDPEI) and HCEs through both theoretical and empirical lenses. The theoretical analysis suggests that relative gains and losses in household income depend on the expected income reference point as a criterion for judgment. It posits that HCEs will increase with the expansion of relative losses formed between expected and actual income. Empirical results indicate that the RDPEI, formed by the relative gain or loss of income between actual and expected income, has a significant positive effect on HCEs. Mechanism analysis reveals that RDPEI influences HCEs not only through loss aversion, risk preference, and the share of household subsistence consumption but also by altering the share of household subsistence consumption through loss aversion and risk aversion. Furthermore, an exploration of group heterogeneity shows that RDPEI more substantially affects HCEs for women and socio-economic groups with lower education and health status. Regarding carbon emission structural heterogeneity, RDPEI has a more pronounced positive effect on survivable and developmental carbon emissions. This research offers a fresh perspective and empirical evidence to address rising HCEs, providing valuable insights for mitigating carbon emissions in other developing countries. [ABSTRACT FROM AUTHOR]

• Contributions to tax-deductible savings plans are used to manipulate tax refunds. • Some evidence this behavior is driven by tax filers with low financial literacy. • Contributions are lumpy, occurring disproportionately at the end of the tax year. • Findings are consistent with loss aversion. Using administrative data from Canada linked to a financial capability survey, I show that tax-deductible savings plans are often used to manipulate final balances owed to the central tax authority during tax season. This finding implies a strong avoidance motive for saving, where tax filers manipulate final balances rather than total tax liabilities, consistent with loss-aversion. The magnitude of this effect is economically significant. For example, each $100 owed increases the likelihood of contributing by about half a percentage point. There is suggestive evidence that the behavior is driven by tax filers with low financial literacy who make disproportionately large contributions in the last 60 days before the annual deadline. [ABSTRACT FROM AUTHOR]

In cost-effectiveness analysis of health technologies, health state utilities are needed. They are often elicited with a composite time trade-off (cTTO) method, particularly for the widely used EQ-5D-5L. Unfortunately, cTTO discriminatory power is hindered by (1) respondents' nontrading (NT) of time for quality, (2) censoring of utilities at −1, and (3) poor correlation of negative utilities with state severity. We investigated whether modifying cTTO can mitigate these effects. We interviewed online 478 students (February to April, 2021) who each valued the same 10 EQ-5D-5L health states in 1 of 3 arms. Arm A used a standard cTTO, expanded with 2 questions to explore reasons for NT and censoring. Arms B and C used a time trade-off with modified alternatives offered to overcome loss aversion, to unify the tasks for positive and negative utilities, and to enable eliciting utilities < −1. In arms B and C, we observed less NT than in A (respectively, 4% and 4% vs 10%), more strictly negative utilities (38% and 40% vs 25%), and more utilities ≤ −1 (18% and 30% vs 10%). The average utility of state 55555 dropped to −2.15 and −2.52 from −0.53. Enabling finer trades in arm A reduced NT by 70%. Arms B and C yielded an intuitive association between negative utilities and state severity. These arms were considered more difficult and resulted in more inconsistencies. The discriminatory power of cTTO can be improved, but it may require increasing the difficulty of the task. The standard cTTO may overestimate the utilities, especially of severe states. • Composite time trade-off (cTTO) method used to elicit utility values for health states has limited discriminatory power due to some respondents not trading time for quality for mild states, multiple observations being censored at −1 for severe states, and counterintuitive lack of association between the negative part of utility and state severity. • We show how changing cTTO can help to overcome all the above 3 phenomena. Offering smaller trades or changing the framing to avoid loss aversion induces trading. Making a task more consistent across better than dead and worse than dead parts restores the association between the negative utility and state severity. The changes result in much lower utility values. • The values elicited with cTTO may overestimate the utility. In consequence, the value of health-related quality of life improvements from severe states may be underestimated, and the value of life prolonging treatments in impaired health may be overestimated, whereas the health interventions offering small health-related quality of life gains for small incremental costs may be artificially disadvantaged. [ABSTRACT FROM AUTHOR]

Demand is frequently found to react differently to price increases than to price decreases. This finding is usually attributed to psychological phenomena such as loss aversion or to the different pace with which price changes become known to potential buyers leading to a kinked demand curve. This kink is often invoked in explaining why prices are sticky, especially in the downward direction. We analyse the presence of and the causes for asymmetric price elasticities of demand for the London Underground. Studying public transport demand offers unique advantages: the service cannot be stored and must be consumed at the point of purchase, and the consumption of public transport cannot be preponed or postponed. During the period that we study some nominal fares on the network have increased while others have decreased, offering a unique opportunity to observe price elasticities for both cases. Comparing changes in price elasticities after a price decrease to changes after a price increase, we find that demand is more sensitive to price increases than to decreases (by 0.5 to 1.0 percentage points). We also find that loss aversion contributes to this asymmetry at least on the intensive margin of transport demand. [ABSTRACT FROM AUTHOR]

The problem of suboptimal treatment adherence among patients with dermatologic or other diseases has not been adequately addressed in health care. Despite a wide range of efficacious therapies, nonadherence remains a primary driver of suboptimal clinical outcomes. Novel solutions to address this unmet need can be found in behavioral economics. By leveraging our understanding of human decision-making, we may better promote treatment adherence, thereby improving quality of life and decreasing economic burdens. Behavioral economics has been studied extensively in relation to topics such as health policy and health behaviors; however, there is a dearth of research applying this approach to chronic diseases and only a handful within dermatology. We conducted a scoping review in PubMed to identify articles that discuss behavioral economics and its application to treatment adherence in dermatologic patients, with a particular focus on psoriasis, followed by a summary of key ethical considerations. We found that such principles can be employed in cost-effective, scalable interventions that improve patient adherence to a range of medical therapies and lifestyle modifications. [ABSTRACT FROM AUTHOR]

Gender differences in decision making is a topic that has attracted much attention in the literature and the debate seems to be inconclusive. A method that is often used in the economics literature to account for gender effects is by estimating econometric structural models and testing the significance of the estimated parameters. In this paper we focus on estimations of preference models and we show how omitting to account for behavioural heterogeneity can lead to failures in identifying potential differences. Using data from risky choice experiments, we compare the traditional representative agent Maximum Likelihood Estimation approach against two more flexible inference methods that allow for heterogeneity at the individual level, the Maximum Simulated Likelihood Estimation, and the Hierarchical Bayesian modelling. We show how ignoring heterogeneity may lead to failures capturing gender differences and we suggest the use of Bayesian modelling to effectively estimate the underlying parameters. [ABSTRACT FROM AUTHOR]

• Communism and the following transition processes affect risk and time preferences. • Deeply rooted cultural differences may influence loss aversion and patience. • Frameworks of prospect theory and quasi-hyperbolic discounting are applied. • Data from two large-scale surveys, INTRA and SOEP, are investigated. Even three decades after the end of communism in Eastern Europe, there are still observable differences in financial risk and time preferences compared to Western Europe. Using data from two large-scale surveys – one including European countries (INTRA) and one for West and East Germany (SOEP) – we show that the causes of these differences are not the same: While differences in loss aversion and patience are most likely caused by deeply rooted cultural differences that date back even before communist times, other differences can be explained by experiences during the communist era and the transition processes that followed. These insights may also help to predict what differences are more likely to converge in the near future. [Display omitted] [ABSTRACT FROM AUTHOR]

Index insurance offers an innovative risk management solution for uninsured agricultural weather risk. We investigate the theoretical relationship between prospect theory risk preferences and characteristics of index insurance. We pair these theoretical findings with data from a lab-in-the-field experiment in Kenya. Empirically, we find that insurance demand is decreasing in loss aversion, and the negative marginal effect of loss aversion on insurance demand increases with basis risk and the insurance premium. Our theoretical and empirical results combined illustrate the importance of considering both risk and loss aversion, as well as basis risk, in understanding index insurance decisions. [ABSTRACT FROM AUTHOR]

A decision-making method with double reference points was built to address the multiattribute group decision-making (MAGDM) problem to better reflect the influences of bottom-line and target on group decision-making behaviors. First, the relationship between double reference points and attitude characteristics of decision-makers was analyzed, and the rules of use of linguistic variables were disclosed. Second, the loss and utility functions were given according to relations between the reference points and gain/loss values. Third, the weights of attributes were determined with references to the variation coefficient method. Later, alternatives were classified according to risk probability, and ranking and selection of alternatives were carried out through utility information aggregation. Finally, the new method was applied to solve the technological innovation environmental assessment problem. Research results demonstrate that the new method can classify alternatives according to feasibility. The rank of feasible alternatives of the new method is consistent with that of the traditional method. Research conclusions further enrich the research scope of multiattribute decision-making problems and provide some references to study MAGDM problems. [ABSTRACT FROM AUTHOR]

The use of contracts to formalize public-private framework agreements (FAs) for emergency supplies reserves has attracted significant attention. Humanitarian decision-makers (HDMs) are increasingly focused on production capacity reserves besides physical emergency stockpiles. Yet, suppliers cooperating with the HDMs often exhibit diverse behavioral preferences, which may cause their decisions to deviate from perfect rational decision-making. To bridge this gap, this paper considers a loss-averse supplier and builds a model of production capacity reserves, wherein production capacity can be capable of being swiftly converted into tangible products to meet urgent demands. The authority's order quantity of emergency options is determined, as is the supplier's reserve amount of production capacity. A comparative analysis reveals that the loss-averse supplier may exhibit two reservation biases compared to a risk-neutral body, i.e., over- and under-stocking of production capacity. When the aspiration level of unit profit drops below zero, overstocking gradually transitions to understocking as the authority's regular inventory level of emergency supplies lowers. Moreover, we uncover the relationship between the unit cost of booking options and the price of emergency purchases such that the supplier's reserve amount of production capacity matches the authority's order decision. Meanwhile, two specific conditions under which the humanitarian supply chain could achieve coordination are presented. Finally, there exists an optimal reservation price that is agreed on by all humanitarian members and benefits them. Overall, exploring the effects of individual preferences on the stockpiling of emergency production capacity provides significant insights for effectively managing emergency production capacity reserves, maintaining the coordination of the humanitarian system, and screening qualified suppliers. • A model of emergency production capacity reserves by a loss-averse supplier is built. • Supplier overstocking or understocking occurs depends on which effect prevails. • Overstocking shifts to understocking with the increase of regular emergency supplies. • The humanitarian channel can reach coordination by adjusting price-cost parameters. • There exists a mutually acceptable reservation price that benefits the HSC members. [ABSTRACT FROM AUTHOR]

• We focus on the sustainable operational strategy of loss-averse manufacturers with reference dependence in a competitive environment. • A lower reference level may compensate for the economic damage caused by loss aversion. • Manufacturers can achieve economic and environmental goals by investing in emission-reduction technologies when faced with a higher carbon trading price and lower initial carbon emissions. • The manufacturer with relatively lower loss aversion and reference level have a competitive advantage over heterogeneous competitor. This study examines the joint optimization decisions on production quantity and sustainable investment of two competing low-carbon manufacturers with loss aversion and reference dependence under the cap-and-trade policy. We focus on exploring the impacts of manufacturers' risk attitude, encompassing factors like the degree of loss aversion and reference dependence, the cap-and-trade policy, and heterogeneous characteristics on optimal decisions and their expected utilities. The main findings are as follows. First, loss aversion and reference dependence have completely opposite effects on manufacturers' production and emission reduction decisions. Specifically, production quantity will become more conservative. Interestingly, the investment to reduce emissions may actually become more aggressive. In addition, setting a lower reference level presents an opportunity for firms to generate greater profits compared to the risk-neutral scenario. Second, affected by loss aversion and reference dependence, manufacturers' sustainable investment may decrease with carbon trading price, which is different from the conclusion of the existing research. Third, the total expected utility of heterogeneous manufacturers decreases with the difference of loss aversion and reference dependence. Finally, we extend our analysis to the impacts of sustainable investment, initial carbon emissions associated with emission reduction and heterogeneous market prices. This paper enriches the research on carbon emission reduction and loss aversion with reference dependence, and provides some managerial insights for practice from the perspective of government and enterprise operation. [ABSTRACT FROM AUTHOR]

Empirical research shows that loss framing appears to be a promising tool to promote pro-environmental behavior. However, only a limited amount of experimental research has examined the effect of loss framing on actual behavior. Here, we use a variation of the Work for Environmental Protection Task (Lange & Dewitte, 2022) to study voluntary pro-environmental behavior. In an online experiment (N = 897), we find a trend of higher working efforts in the LOSS frame. However, this effect is small and marginally statistically significant. Interestingly, as explorative analyses suggest, the effect of loss framing is consistent for people with low and high intrinsic values to protect the environment. [ABSTRACT FROM AUTHOR]

This paper examines whether the presence and magnitude of estimated loss aversion (LA) in a discrete choice experiment is a function of modeling choice. The experiment examined preferences for utility-scale solar energy siting based on a series of installation attributes and changes in household electric bill (the payment vehicle, which can increase or decrease relative to the status-quo). We employ multiple discrete choice modeling approaches and show that, across all models, the implications of accounting for loss aversion are qualitatively similar and match theoretical predictions. Despite this similarity, when comparing results across models we find that model choice has substantial impacts on estimated loss aversion. Specifically, different models estimate loss/gain ratios below two and in excess of six for the same data set. Thus, the consequences of framing decisions, which are an important aspect of nonmarket valuation, are not just the provenance of survey and choice experiment design but may also be heavily influenced by empirical model choice. • Examines the magnitude of loss aversion using a discrete choice experiment • Considers preferences for utility-scale solar energy development plans • Options can raise or lower electric bills, allowing testing for loss aversion • Estimated loss aversion is impacted not just by survey design, but by model choice [ABSTRACT FROM AUTHOR]

Generalized anxiety disorder is characterized by disruptions in decision-making, including an enhanced aversion to uncertain outcomes (i.e., risk aversion), which is not specific to negative outcomes (i.e., no loss aversion). It is unknown if this uncertainty bias is a trait-like causal factor contributing to anxiety symptoms, or a state-like feature triggered by anxiety symptoms such as worry chains. Here, in-patients with Major Depression Disorder (MDD), with (N = 16) or without (N = 24) Generalized anxiety (GA) symptoms, and healthy controls (N = 23), completed an economic decision-making task before and after worry induction. They were asked to choose between a certain monetary payoff, and an uncertain gamble, allowing for estimation of risk and loss aversion through a computational prospect-theoretic model. There were no significant differences in risk and loss aversion between any of the three groups at baseline. After worry induction, patients with GA symptoms, compared to those without, showed increased risk aversion. This increase was modulated by the severity of anxiety symptoms. These findings suggest that decision-making disruptions in anxiety disorder may be driven by anxiety symptoms such as worry, rather than causing them. This could shape etiological models, motivate standardization of emotional state in research on decision-making in anxiety disorders, support treatment strategies primarily aimed at worry management, and could guide novel interventions focusing on uncertainty exposure across aversive and appetitive domains. [ABSTRACT FROM AUTHOR]

• We design an experiment with real incentives to investigate the sunk cost bias and potential psychological mechanisms explaining it. • We observe a robust reverse sunk cost effect: the larger an initial investment into a project, the lower the likelihood to continue investing. • The reverse sunk cost effect in the incentivized task is also shown by participants who show a standard sunk cost bias in survey measures. We experimentally investigate the effect of sunk cost in a two-stage investment continuation task. After an initial investment, participants have to decide whether or not to continue the project with an additional investment. We do not find a standard sunk cost bias, but observe a robust reverse sunk cost effect: the larger the initial investment, the lower the likelihood to continue investing. This holds despite the fact that we replicate the standard sunk cost bias in hypothetical scenarios. We argue that both, risk aversion without asset integration and loss aversion can account for the reverse sunk cost effect. [ABSTRACT FROM AUTHOR]

A fundamental tenet of economics is that agents respond to incentives. When filing their tax returns, Swedish taxpayers get information about whether they are below or above a salient tax kink, information that could affect tax-filing behavior. Ceteris paribus, rational taxpayers would be more likely to claim deductions when facing a higher marginal tax rate. They also get informed whether they can expect a tax refund or have taxes due. This information would be of no importance to rational individuals, but a loss averse taxpayer would be more likely to claim deductions if having taxes due than if expecting a refund. We study the probability of claiming deductions in an RDK framework using register data on the universe of Swedish taxpayers over an eight-year period. We find a strong causal effect of taxes due, while the response to the marginal tax kink is insignificant. The results are similar for inexperienced (young) and experienced (old) taxpayers. Hence, loss aversion is much more decisive than standard economic incentives in predicting deduction behavior. [ABSTRACT FROM AUTHOR]

• Propose model to consider probabilistic preliminary preference (PP) in unlabeled choice context. • Both mixture and latent class structure considered. • Simulation analysis confirms parameters can be estimated using MLE. • Proposed model applied to parking choice dataset and has better fit to data than existing models. • Analysis reveals loss aversion and inertia (or variety seeking) are present in parking choice data. When selecting among a set of alternatives, individuals often compare each alternative with reference to some preliminary preference (PP). The preliminary preference could be the individual's preferred global option (i.e., their ideal choice) or the most ideal option within the current choice set. Previous research has shown that loss of an attribute relative to that of the PP has a stronger impact on the individual's choice compared to gain of that attribute—a phenomenon commonly known as loss aversion. To incorporate this loss aversion into choice modeling, the PP of the individuals must then be known; however, such information is generally not available when observing individual's choice behavior. To overcome the lack of knowledge of an individual's PP, this study proposes a probabilistic approach where all alternatives in the choice set have some potential of being an individual's PP. A multinomial logit (MNL) based methodology, named the latent preliminary preference (LPP) model, is used to estimate the PP probabilities entirely as a function of the decision-maker characteristics and each alternative's attributes, which overcomes the complexity that arises when choices are unlabeled. In addition, the methodology accommodates inertia that some individual's may have toward their PP, as well as the desire to try new options. Moreover, this study proposes randomizing the parameters of LPP model to account for random taste heterogeneity of individuals that would arise in a panel dataset, giving rise to random parameter latent preliminary preference (RPLPP) model. The ability of maximum likelihood inference method to retrieve the parameters of fixed parameters LPP model is demonstrated on synthetic data. The statistical significance and bias in estimated parameters are also demonstrated. The proposed model is then applied on a parking preference survey to examine the presence of loss aversion and inertia/variety seeking behavior among the respondents. [ABSTRACT FROM AUTHOR]

We introduce a training intervention based on a novel tool to mitigate behavior consistent with myopic loss aversion (MLA). We present the results of a large-scale online experiment with 894 student participants. The study featured a two-step debiasing training intervention based on experience sampling and a subsequent elicitation of MLA. We found that participants in the baseline treatment exhibit behavior consistent with MLA, which was not the case for decision makers who underwent the debiasing training intervention. Nonetheless, we found no statistically significant difference-in-difference effect of the training intervention on the magnitude of MLA. However, when we focused on the more attentive participants, the magnitude of the difference-in-difference effect of the training intervention increased strongly and became statistically significant when controlling for age, gender, education, field of study, investment experience, and risk preferences. [ABSTRACT FROM AUTHOR]

The debate between stick (penalties) and carrot (rewards) strategies has been widely carried out in various academic realms, including transportation. This paper seeks to compare the instantaneous and longitudinal effectiveness of a traditional penalty-based congestion pricing strategy and an innovative Incentive-Based Traffic Demand Management (IBTDM) strategy using an online interactive laboratory experiment focused on departure time choice. We also investigate the social-economic phenomena of loss aversion and risk aversion. The experimental results show that penalties and rewards can both positively induce sustainable travel behavior. The stronger demand-shifting performance of the penalty-based strategy at first demonstrates that 'loss aversion' does exist in TDM, at least initially. However, this loss aversion weakens as the experiment continues, which verifies the myopic loss aversion theory. Moreover, risky decision-making in the gambling games proves the existence of risk seeking, which violates the 'certainty effect'. To overcome the disadvantage of laboratory experiment that participants need to accomplish the experiment all in once for considerably long time, an agent-based model is calibrated based on real participants' behavior to further verify the long-term effectiveness of penalties and rewards, and to verify the effectiveness of other optimized penalty/reward schemes. The simulated results based on the agent-based model indicate that the theoretical optimal penalty scheme performs better in general in congestion alleviation, while a more reasonable reward scheme that considers psychological factors can achieve the same effectiveness in terms of total system travel time reduction. The findings of this research can be used to guide the design of TDM strategies, and the behavioral data collection approach based on our laboratory experiment is portable for future studies. [ABSTRACT FROM AUTHOR]

We examine an unexplored connection between economic sentiments and the degree of international risk sharing. As sentiments provide a sense of the expected direction of future income changes, if risk sharing is imperfect, countries experiencing weak sentiments should take actions to enable the smoothing of their consumption in the event this fall in income materialises. However, we find the opposite holds: weak sentiments are associated with reduced risk sharing. This finding is robust to the inclusion of alternative determinants of international risk sharing, the state of the business cycle as well as undiversifiable and persistent output fluctuations. We provide evidence that our results are consistent with loss aversion. Our findings have important implications for private initiatives and public institutions that aim to improve international risk sharing, which are usually designed on the basis of risk-averse or risk-neutral behaviour. [ABSTRACT FROM AUTHOR]

• Built an evolutionary game model by introducing internal and external factors. • Construct a system dynamics simulation model to conduct simulation experiments. • The evolutionary stable trend of groups' behavior depends on information intensity. • Reference points can change groups' decision-making and presenting loss aversion. • Benefit-distribution and cost-sharing coefficient affect groups' behavior strategy. The reveal of express packaging waste recycling behavior evolution trend is crucial to waste management. Current models are mostly based on the classic expected utility theory, without considering groups are susceptible to internal and external factors. To address this drawback, we construct an evolutionary game model of express packaging waste recycling behavior by considering information policy and reference dependence factors to explore groups' decision-making with different initial adoption rates. A system dynamics simulation model based on survey data is then built, and simulation experiments are also designed to reveal the impacts of key factors on the evolution path of recycling behavior. The results show that, without information policy, groups cyclically oscillate around the initial state. The stable trend depends on the information intensity, and the information effect is marginal diminishing. Groups with a lower initial adoption rate will evolve to an ideal stable strategy only when information intensity exceeds the threshold of ten. Reference points can change behavior strategies and are characterized by significant loss aversion. The benefits and costs affect groups' adoption or rejection behaviors. These findings can provide new ideas for related research and offer a reference for the government to formulate efficient waste management policies. [ABSTRACT FROM AUTHOR]

• Explores the potential and challenges of applying behavioural interventions to promote micro-mobility adoption. • Online experiments with New York City residents between February and October 2020. • Nudges and loss/gain domain faming improved respondents' willingness to adopt e-scooters significantly. • Effects of these behavioural interventions varied significantly during the pandemic. • Individual and group characteristics should be assessed to devise behavioural interventions for a particular target audience. This study explores the potential and challenges of applying behavioural interventions to promote micro-mobility adoption. Our online experiments with New York City residents showed that nudges and faming improved respondents' willingness to adopt e-scooters significantly. Moreover, our experiments spanned over the pre-, during- and post- COVID-19 lockdown period in New York City. Findings from this natural experiment revealed that the effect of these behavioural interventions varied significantly during the pandemic, likely due to a heightened level of health consciousness and a new perspective regarding social interactions. Behavioural tools cannot be taken off-the-shelf and applied as a blanket policy. Individual and group characteristics have to be assessed to devise the pre-eminent behavioural interventions for a particular target audience. More experiments across a wide range of economic, social, cultural, and political settings are needed to guide the application of behavioural interventions in transportation studies. [ABSTRACT FROM AUTHOR]

The Electronic Road Pricing (ERP) system in Singapore has been in operations since 1998 and has seen consistent levels of success in managing traffic in this city-state with high vehicle usage and limited land space. With the ERP rates reviewed quarterly and adjusted for the relevant 30-min periods based on speeds criteria, the volume of data collected through the years has enabled a closer look at how motorists behave with rate increases or decreases, and how these travel behaviors compare with the established consumer behavior phenomenon of loss aversions and the theory of diminished sensitivity. This paper studied 33 rate changes across 6 expressway ERP pricing gantries between the years of 2012 and 2018, and derived precise observations of travel behavior changes. The data showed that frequent car drivers tend to make more deliberate choices on whether to leave or stay on their routes. Frequent car drivers are defined as those who drive past that gantry at least 60% of the weekdays in that month (proportionally around 3 weekdays per week). We also affirmed that loss aversion theory is exhibited in road pricing through the higher demand elasticities observed from $1 rate increases as compared to the $1 rate reductions. Interestingly however, the theory of diminishing sensitivity did not seem to drive traveler's decisions here. Instead, Singapore drivers appeared to have assessed their trip decisions based on two reference points during rate increases; a primary reference point of $2 and a reasonable reference point of $5. [ABSTRACT FROM AUTHOR]

Even though risk management is a vital aspect of project management, the way that risk-based decisions are taken in projects is not well documented. Economic theory employs the concept of utility and assumes that decision makers are rational. Behavioural economics and prospect theory challenge this idea, making a number of specific claims about how decision-making behaviour deviates from rationality in practice. Based on a focus group discussion with project managers, this research highlights the importance of risk management in underpinning decision making and investigates the extent of rationality and applicability of prospect theory in an engineering project context. Prospect theory's claims of reference dependence and loss aversion are found to be important, but the claims of diminishing sensitivity and probability weighting appear to be less relevant. [ABSTRACT FROM AUTHOR]

We measure the marginal effects of two crucial dimensions of the Investment Game design of Gneezy and Potters (1997, GP97) and its replications: time frequency and time horizon. To this aim, we randomize between subjects five different time frequencies: 1 round ("High Frequency" in GP97), 3 rounds ("Low Frequency"), but also 6, 9 and 12 rounds. As for time horizon, we compare the baseline GP97 horizon (9 rounds) with smaller (3 and 6 rounds), but also higher (12 rounds) alternatives. We find that, holding the time horizon constant, subjects invest more when they evaluate their investments less frequently, but this result is significant only when time horizon is sufficiently long. We also find that lower frequencies increase the marginal investment at a decreasing rate. As for time horizon, we find that, holding time frequency constant, the higher the horizon, the lower the investment (although, as in the previous case, investment lowers at a decreasing rate). Our reduced form results also show that subjects' behavior is sensitive to the endowment stock provided along the experiment, independently of time frequency. [ABSTRACT FROM AUTHOR]

Would you take a gamble with a 10% chance to gain $100 and a 90% chance to lose $10? Even though this gamble has a positive expected value, most people would avoid taking it given the high chance of losing money. Popular "fast-and-slow" dual process theories of risky decision making assume that to take expected value into account and avoid a loss aversion bias, people need to deliberate. In this paper we directly test whether reasoners can also consider expected value benefit intuitively, in the absence of deliberation. To do so, we presented participants with bets and lotteries in which they could choose between a risky expected-value-based choice and a safe loss averse option. We used a two-response paradigm where participants made two choices in every trial: an initial intuitive choice under time-pressure and cognitive load and a final choice without constraints where they could freely deliberate. Results showed that in most trials participants were loss averse, both in the intuitive and deliberate stages. However, when people opted for the expected-value-based choice after deliberating, they had predominantly already arrived at this choice intuitively. Additionally, loss averse participants often showed an intuitive sensitivity to expected value (as reflected in decreased confidence). Overall, these results suggest that deliberation is not the primary route for expected-value-based responding in risky decision making. Risky decisions may be better conceptualized as an interplay between different types of "fast" intuitions rather than between two different types of "fast" and "slow" thinking per se. [ABSTRACT FROM AUTHOR]

The outbreak of uncertain events, e.g., financial crisis, regional conflict and abrupt contagion, has a significant impact on residents' income. Hence, the wealth management and portfolio selection become more and more important. In addition, the behavioral finance believes that decision-making process of the investors not only depend on utility maximization, but also on who to compare with. It differs from the traditional finance based on rational cognitive acquiring and decision-making of agents, in this paper, we consider both investment uncertainty and investment utility with reference level for portfolio selection. First, we introduce the uncertainty theory and loss aversion utility with reference level based on behavioral finance. Then we study an uncertain multi-period portfolio selection problem. Moreover, we formulate an uncertain behavioral portfolio selection model with three objective functions for which we propose an equivalent program consisting of a main model and two auxiliary models for tri-objective optimization model. Thereafter, we use a modified evolutionary root system growth algorithm to solve the transformed models. Finally, a numerical simulation allows to show the practicability of proposed models and validity of modified algorithm. [ABSTRACT FROM AUTHOR]