Ulric B. and Evelyn L. Bray Social Sciences Seminar
Abstract: To measure individual-level loss aversion in a representative sample of the U.S. population (N= 2,000), we introduce DOSE—Dynamically Optimized Sequential Experimentation. We find that around 50% of the U.S. population is loss tolerant. This is counter to earlier findings, which mostly come from lab/student samples, that a strong majority of participants are loss averse. Loss attitudes are correlated with cognitive ability: loss aversion is more prevalent in people with high cognitive ability, and loss tolerance is more common in those with low cognitive ability. We also use DOSE to document facts about risk and time preferences, and demonstrate that DOSE elicitations are more accurate, more stable across time, and faster to administer than standard methods.
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