Organizational justice scholars have ignored the influence that the nature of a decision outcome has upon reactions to perceived injustice, yet research on loss aversion demonstrates that people react more strongly to situations that result in a loss than those that result in an anticipated gain failing to materialize (non-gain). Furthermore, research on regulatory focus has found that the nature of a decision outcome can itself elicit different emotions. Based on this, a cognitive appraisal model of the relationship between injustice and emotions is proposed that accounts for the effect of decision outcome. This model predicts that emotional reactions to injustice will differ according to the nature of the received decision outcome as well as the fairness of the procedure used to reach that outcome. Specifically, it is hypothesized that a loss decision outcome will elicit a prevention focus and lead to greater agitation-related emotions, whereas a non-gain decision outcome will elicit a promotion focus and result in greater dejection-related emotions. In addition, it is predicted that, in the presence of an unfair procedure, outward-focused, foci-related emotions will be reported and that perceptions of procedural injustice will be related to increased retaliation especially following a loss. To test these predictions, participants were asked to provide their reactions to vignettes describing aloss or non-gain reached via a fair or an unfair procedure. Although all hypotheses were not supported, it was found that decision outcome produced a significant main effect on emotions, such that participants reported higher levels of negative emotions after a loss and higher ratings of positive emotions after a non-gain. In addition, it was found that procedural injustice was related to higher levels of outward-focused, negative emotions and increased retaliation.

Den traditionella förväntade nyttoteorin har kritiserats för att inte vara realistisk i sina förutsägelser om hur beslut tas vid risk. Eftersom de flesta situationer innefattar någon form av risk är det viktigt att utreda ifall man bör söka efter en alternativ teori. I denna uppsats undersöks hur väl nyttoteorin och en konkurrent till denna, prospektteorin, kan förklara riskbeteendet hos Black Jack-spelare. Detta görs genom en studie av fem individers spelbeteende på en krog i centrala Jönköping. Materialet analyseras både grafiskt och statistiskt genom att undersöka om individernas beteende förändras beroende på utfallet dels i de fem senaste händerna och dels under hela spelomgången. Resultaten tyder på att individer tar bättre beslut om de har en ackumulerad vinst och sämre beslut om de har en ackumulerad förlust under den tidigare spelomgången, vilket är förenligt med prospektteorin. Samtidigt upptäcks en uttröttningseffekt som leder till sämre beslut tagna ju längre man har spelat, som ingen av teorierna förutsäger. En spelare som har en vinst kan kompensera för denna effekt, men en spelare med förlust kommer att ta sämre beslut både på grund av förlusten och på grund av uttröttning i något som kan kallas för en förlustspiral.

We examine in an experiment the causes, consequences and possible cures of myopic loss aversion (MLA) for investment behaviour under risk. We find that both, investment horizons and feedback frequency contribute almost equally to the effects of MLA. Longer investment horizons and less frequent feedback lead to higher investments. However, when given the choice, subjects prefer on average shorter investment horizons and more frequent feedback. Exploiting the status quo bias by setting a long investment horizon or low feedback frequency as a default turns out to be a successful behavioural intervention that increases investment levels. (author´s abstract) / Series: Department of Economics Working Paper Series

Thesis (Ph.D.)--University of Wollongong, 2007. / Typescript. Includes bibliographical references: leaf 168-189.

abstract: Loss aversion manifests as a decision bias in which avoiding losses is preferred over acquiring rewards and can drastically alter an individual’s decision-making by overweighting potential losses relative to gains of equal magnitude. Consequently, individuals may require greater positive compensation to offset potential losses, exhibit contradictory choice preferences, or even avoid the decision entirely; and this behavior may be ascribed to an over-reliance on automatic, unconscious (intuitive) judgments rather than initiating analytic reasoning more capable of objectively evaluating outcomes. Religion (specifically Christianity) is the topic of focus, as preliminary evidence suggests an individual’s intuitive inclinations positively correlate with and predict religious beliefs. Moreover, self-reported religious beliefs significantly differed as a function of inducing either intuitive or reflective mindsets. Therefore, the purpose of this experiment was to test the hypothesis that religious participants will display significantly greater levels of loss aversion than nonreligious participants. This hypothesis extends from a previous study relating large-scale cultural and religious differences with loss aversion. While their results revealed religious orthodoxy strongly influenced loss aversion, the parameters elicited may be less stable as only two lottery questions were asked and religion was determined by cultural demographics. This study used the same design, but with a total of ten lotteries and a more detailed investigation into individual religious factors. While loss aversion coefficients replicated the overall behavioral effect (Median θ = 2.6), independent sample, Mann-Whitney U tests did not yield any significant differences between Christian and Nonreligious participants (p > 0.05); nor did any of the religious factors examined account for a significant amount of variability. This study attempted to add to current knowledge by further conflating the relationship between religiosity and adaptive decision strategies susceptible to errant and inconsistent behavior. While the hypotheses were unsupported, a null finding is still important, and future research re-testing this association or introducing causational designs may prove more fruitful in understanding these complex relationships. / Dissertation/Thesis / Masters Thesis Psychology 2017

abstract: The attractiveness of a reward depends in part on the delay to its receipt, with more distant rewards generally being valued less than more proximate ones. The rate at which people discount the value of delayed rewards has been associated with a variety of clinically and socially relevant human behaviors. Thus, the accurate measurement of delay discounting rates is crucial to the study of mechanisms underlying behaviors such as risky sex, addiction, and gambling. In delay discounting tasks, participants make choices between two alternatives: one small amount of money delivered immediately versus a large amount of money delivered after a delay. After many choices, the experimental task will converge on an indifference point: the value of the delayed reward that approximates the value of the immediate one. It has been shown that these indifference points are systematically biased by the direction in which one of the alternatives adjusts. This bias is termed a sequencing effect. The present research proposed a reference-dependent model of choice drawn from Prospect Theory to account for the presence of sequencing effects in a delay discounting task. Sensitivity to reference frames and sequencing effects were measured in two computer tasks. Bayesian and frequentist analyses indicated that the reference-dependent model of choice cannot account for sequencing effects. Thus, an alternative, perceptual account of sequencing effects that draws on a Bayesian framework of magnitude estimation is proposed and furnished with some preliminary evidence. Implications for future research in the measurement of delay discounting and sensitivity to reference frames are discussed. / Dissertation/Thesis / Masters Thesis Psychology 2018

Background: Kahneman and Tversky (1974, 1979 & 1992) argue that individuals are bound to numerous behavioral biases that may lead to the emergence of different irrational behaviors. This is often observed with even a higher degree among participants of financial and stock markets as agents such as investors are frequently exposed to significant level of risk and uncertainty (Kahneman, 2013; Kahneman, Knetsch & Thaler, 1991; Kahneman & Tversky, 1974, 1979, 1992). Also, empirical studies indicate that a significant level of herding exists among investors when they are exposed to a high degree of risk and uncertainty such as those in financial crises (Galariotis, Rong & Spyrou, 2014; Litimi, 2017; Hott, 2009). Purpose: the main purpose of this thesis is to explore if the loss aversion bias has a significant causal impact on forming herding behavior among young Swedish retail investors. Method: an online analytical questionnaire including eight questions has been conducted to collect primary data, with 77 Swedish retail investors under the age of 35 participating in the study. Furthermore, a multiple regression analysis has been implemented to analyze and interpret the data. Conclusion: it can be concluded that there is not a significant correlation between the degree of loss aversion and the degree of herding behavior within the sample group of young Swedish retail investors. Hence, loss aversion bias cannot be considered as one of the major contributors of herding within the target population.

Loss aversion is a theory which states that losses loom larger than gains. Negative outcomes are weighted heavier than positive outcomes in decision making but could this weight change when different prospects are evaluated? This thesis focuses on how the loss aversion changes toward different magnitudes of a loss for young individuals when they are faced with a 50/50 chance of winning or losing a gamble. The loss aversion is tested toward six different magnitudes of a potential loss ranging from 100 kr to 4 000 kr. The loss aversion toward these six different magnitudes is then compared to examine how the loss aversion changes. This data was collected using a survey experiment that was digitally distributed to economics students at Linnaeus University in Växjö.The results from the subsequent analysis showed that the loss aversion was not constant towards all six losses. The loss aversion was different in ten out of fifteen pairwise comparisons. Respondents became more loss averse when the loss increased but the loss aversion did however seem to be less sensitive to increases in losses above the 1 000 kr mark.

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