Loss Aversion in Financial Markets
Experimental evidence suggests that people are more sensitive to losses than gains by a factor of about two. Researchers have drawn implications from loss aversion to understand various aspects of individual decisions and asset prices in financial markets. At the current stage, some ancillary assump...
| Main Author: | |
|---|---|
| Format: | Article |
| Language: | English |
| Published: |
Society for the Promotion of Mechanism and Institution Design
2019-11-01
|
| Series: | Journal of Mechanism and Institution Design |
| Subjects: | |
| Online Access: |
http://www.mechanism-design.org/arch/v004-1/p_05.pdf
|
| Summary: | Experimental evidence suggests that people are more sensitive to losses than gains by a factor of about two. Researchers have drawn implications from loss aversion to understand various aspects of individual decisions and asset prices in financial markets. At the current stage, some ancillary assumptions have been made in deriving these implications. Loss aversion affects financial markets through affecting the risk attitudes of market participants. Taken as a whole, loss aversion is a useful ingredient in helping us understand financial markets. |
|---|---|
| ISSN: | 2399-844X 2399-8458 |