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 -