Deciding for Others Reduces Loss Aversion

Author(s)
Ola Andersson, Hakan Holm, Jean-Robert Tyran, Erik Wengström
Abstract

We study risk taking on behalf of others, both with and without potential losses. A large-scale incentivized experiment is conducted with subjects randomly drawn from the Danish population. On average, decision makers take the same risks for other people as for themselves when losses are excluded. In contrast, when losses are possible, decisions on behalf of others are more risky. Using structural estimation, we show that this increase in risk stems from a decrease in loss aversion when others are affected by their choices.

Organisation(s)
Department of Economics, Vienna Center for Experimental Economics
External organisation(s)
Research Institute of Industrial Economics, Lund University, University of Copenhagen
No. of pages
38
Publication date
09-2013
Austrian Fields of Science 2012
502047 Economic theory
Portal url
https://ucrisportal.univie.ac.at/en/publications/0cfdb975-3d71-44e7-9b13-fae6f33a7d51