'At Least I Didn't Lose Money': Nominal Loss Aversion Shapes Evaluations of Housing Transactions
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'At Least I Didn't Lose Money' : Nominal Loss Aversion Shapes Evaluations of Housing Transactions. / Stephens, Thomas Alexander; Tyran, Jean-Robert Karl.
Cph. : Department of Economics, University of Copenhagen, 2012.Research output: Working paper › Research
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TY - UNPB
T1 - 'At Least I Didn't Lose Money'
T2 - Nominal Loss Aversion Shapes Evaluations of Housing Transactions
AU - Stephens, Thomas Alexander
AU - Tyran, Jean-Robert Karl
N1 - JEL Classification: A10, C91, D00
PY - 2012
Y1 - 2012
N2 - Loss aversion is one of the most robust findings to have emerged from behavioral economics. Surprisingly little attention, however, has been devoted to nominal loss aversion, the interaction of loss aversion and money illusion. People tend to think of transactions in terms of their nominal (monetary) values. Real losses may therefore loom larger in people’s minds when they lose money than when real losses are hidden by purely nominal gains. Using a survey experiment with a large and heterogeneous sample, we show that evaluations of housing transactions are systematically biased by purely nominal gains versus losses.
AB - Loss aversion is one of the most robust findings to have emerged from behavioral economics. Surprisingly little attention, however, has been devoted to nominal loss aversion, the interaction of loss aversion and money illusion. People tend to think of transactions in terms of their nominal (monetary) values. Real losses may therefore loom larger in people’s minds when they lose money than when real losses are hidden by purely nominal gains. Using a survey experiment with a large and heterogeneous sample, we show that evaluations of housing transactions are systematically biased by purely nominal gains versus losses.
KW - Faculty of Social Sciences
KW - loss aversion
KW - money illusion
KW - bounded rationality
KW - cognitive reflection
KW - cognitive ability
KW - survey experiment
M3 - Working paper
T3 - University of Copenhagen. Institute of Economics. Discussion Papers
BT - 'At Least I Didn't Lose Money'
PB - Department of Economics, University of Copenhagen
CY - Cph.
ER -
ID: 40934654