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Journal Article

Individual differences in loss aversion

Authors

Publication date

2016

Summary

Loss aversion is considered a general pervasive bias occurring regardless of the context or the person making the decision. We hypothesized that conscientiousness would predict an aversion to losses in the financial domain. We index loss aversion by the relative impact of income losses and gains on life satisfaction. In a representative German sample (N = 105,558; replicated in a British sample, N = 33,848), with conscientiousness measured at baseline, those high on conscientiousness have the strongest reactions to income losses, suggesting a pronounced loss aversion effect, whereas for those moderately unconscientious, there is no loss aversion effect. Our research (a) provides the first evidence of personality moderation of any loss aversion phenomena, (b) supports contextual perspectives that both personality and situational factors need to be examined in combination, (c) shows that the small but robust relationship between income and life satisfaction is driven primarily by a subset of people experiencing highly impactful losses.

Published in

Personality and Social Psychology Bulletin

Volume and page numbers

42 , 471 -484

DOI

http://dx.doi.org/10.1177/0146167216634060

ISSN

16

Subjects

Psychology and Finance

Links

University of Essex, Albert Sloman Library Periodicals *restricted to University of Essex registered users* - http://serlib0.essex.ac.uk/record=b1609100~S5

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