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Cited by 452Decision-Making and Behavioral EconomicsNeural and Behavioral Psychology StudiesExperimental Behavioral Economics Studies

Thinking like a trader selectively reduces individuals' loss aversion

Open access
Sokol-Hessner, Peter, Hsu, Ming, Curley, Nina G., Delgado, Mauricio R., Camerer, Colin F., Phelps, Elizabeth A.·2009·Proceedings of the National Academy of Sciences
DOI 10.1073/pnas.0806761106PMC PMC2656558
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Abstract

Research on emotion regulation has focused upon observers' ability to regulate their emotional reaction to stimuli such as affective pictures, but many other aspects of our affective experience are also potentially amenable to intentional cognitive regulation. In the domain of decision-making, recent work has demonstrated a role for emotions in choice, although such work has generally remained agnostic about the specific role of emotion. Combining psychologically-derived cognitive strategies, physiological measurements of arousal, and an economic model of behavior, this study examined changes in choices (specifically, loss aversion) and physiological correlates of behavior as the result of an intentional cognitive regulation strategy. Participants were on average more aroused per dollar to losses relative to gains, as measured with skin conductance response, and the difference in arousal to losses versus gains correlated with behavioral loss aversion across subjects. These results suggest a specific role for arousal responses in loss aversion. Most importantly, the intentional cognitive regulation strategy, which emphasized “perspective-taking,” uniquely reduced both behavioral loss aversion and arousal to losses relative to gains, largely by influencing arousal to losses. Our results confirm previous research demonstrating loss aversion while providing new evidence characterizing individual differences and arousal correlates and illustrating the effectiveness of intentional regulation strategies in reducing loss aversion both behaviorally and physiologically.

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Written from the paper’s full text.

TL;DR

An intentional “think like a trader” perspective-taking strategy reduced behavioral loss aversion and, among participants who successfully reduced loss aversion, reduced skin conductance arousal to losses relative to gains. The results link loss aversion to differential physiological arousal to losses versus gains and show that this response can be regulated.

Key findings

  • In Study 1 (n = 30), Attend condition mean loss aversion was λ = 1.40 (SE 0.15), with mean log(λ) = 0.198 (0.09), significantly greater than zero, t(29) = 2.113, P < 0.05; Regulate condition mean λ = 1.17 (0.15), mean log(λ) = −0.0005 (0.10), not significantly different from zero, t(29) = −0.005, n.s. The within-subject reduction in λ was significant, t(29) = 3.64, P < 0.0011, with 26 of 30 subjects showing decreases and an average reduction of 16% (SE 3.09%).
  • Study 2 behavioral results confirmed the effect: Attend mean λ = 1.31 (0.13), Regulate mean λ = 1.15 (0.12), paired t(28) = 6.91, P < 1.6 × 10⁻⁷; no significant effects were found for ρ or μ.
  • In Study 2, losses were more arousing than gains in the Attend condition (Loss − Gain SCR = 0.0092/$, t(28) = 1.89, P < 0.035 one-tailed) but not in the Regulate condition (0.0017/$, t(28) = 0.24, P < 0.40). Only “Regulators” showed a significant decrease in Loss − Gain SCR from Attend to Regulate (0.0102/$ to −0.0102/$, t(13) = 2.04, P < 0.031); Nonregulators showed a nonsignificant increase.
  • Loss − Gain SCR difference scores positively correlated with behavioral loss aversion λ in both Attend (r(27) = 0.394, P < 0.035) and Regulate (r(27) = 0.403, P < 0.031) conditions.

Methods

  • Participants made forced monetary choices between a binary gamble (P = 0.5) and a guaranteed amount (P = 1), with 140 choices per set, under two instructed strategies: “Attend” (consider each choice in isolation) and “Regulate” (consider choices in context, “as if creating a portfolio” or “imagine yourself [as] a trader”).
  • Study 1 had 30 participants (13 male, mean age 22 ± 3 years) who completed behavioral sessions with a $30 endowment and payment based on 10% of trials. Study 2 began with 52 participants (19 male, mean age 21 ± 3 years); after exclusions, 29 participants provided behavioral and physiological data, with skin conductance response (SCR) recorded during the choice task.
  • Choice behavior was modeled with three parameters: λ (loss aversion), ρ (risk aversion/curvature), and μ (logit sensitivity), estimated separately for Attend and Regulate using maximum likelihood in Mathematica v5.2; likelihood ratio tests assessed model significance and within-subject parameter changes.

Limitations

  • The paper states that the study is correlational and that future manipulations altering arousal directly will be necessary to demonstrate causality.
  • The paper states that it was not concerned with isolating the efficacious parts of the regulation instructions, and that future research could unpack the effects of the various strategic components.
  • Evident from the text: samples were small and young (mean ages 22 and 21), Study 2 had substantial exclusions (e.g., 12 for imprecise parameter estimation, 4 for noiseless performance, 2 for outlier behavior, 2 for instruction-related issues, plus SCR nonresponding and scheduling/experimenter issues), and the physiological analysis was limited to 29 participants.

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Crossref · 10.1073/pnas.0806761106

Cites

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Claims the paper makes

0 of 31 cited sources checked · 0 supported · 0 flagged

  • Findingown data
    § Results

    In Study 2, only Regulators showed a significant decrease in Loss−Gain SCR difference from Attend to Regulate (Attend=0.0102/$, Regulate=−0.0102/$, t(13)=2.04, P<0.031 one-tailed paired t test).

    “Only Regulators showed a significant decrease in the Loss − Gain SCR difference score from Attend to Regulate (Attend = 0.0102 /$, Regulate = −0.0102 /$, t(13) = 2.04, P < 0.031 one-tailed paired t test)”
    Quote in the paperSubstantial claim
    • Rests on an assumption: Skin conductance response is a valid measure of sympathetic nervous system activity and bodily arousal.
  • Findingown data
    § Results

    In Study 2, separate ANOVA on Loss SCR showed a trending interaction between Strategy and Group (F(1,27)=3.791, P<0.062), with all other P's>0.37.

    “The Loss SCR score ANOVA showed a trending interaction between Strategy and Group (F(1,27) = 3.791 P < 0.062, all other P's > 0.37)”
    Quote in the paperSubstantial claim
    • Rests on an assumption: Skin conductance response is a valid measure of sympathetic nervous system activity and bodily arousal.
  • Findingown data
    § Results

    In Study 2, paired t tests confirmed a strong effect of Regulate on loss aversion λ (t(28)=6.91, P<1.6×10−7).

    “Paired t tests between the Attend and Regulate conditions confirmed a strong effect for the loss aversion coefficient λ (t(28) = 6.91 P < 1.6 × 10−7).”
    Quote in the paperSubstantial claim
    • Rests on an assumption: The quantitative parametric behavioral models conventionally used in economics accurately capture loss aversion, risk aversion, and choice consistency.
  • Findingown data
    § Results

    In Study 2, individuals' Loss−Gain SCR difference scores positively correlated with behavioral loss aversion λ in the Attend condition (r(27)=0.394, P<0.035).

    “Individuals' Loss − Gain SCR difference scores also positively correlated with their respective behavioral loss aversion (λ) coefficients in both the Attend condition (r(27) = 0.394, P < 0.035) (See Fig. 4)”
    Quote in the paperNot a substantial claim
    • Rests on an assumption: Skin conductance response is a valid measure of sympathetic nervous system activity and bodily arousal.
    • Rests on an assumption: The quantitative parametric behavioral models conventionally used in economics accurately capture loss aversion, risk aversion, and choice consistency.
  • Findingown data
    § Results

    In Study 2, Nonregulators showed a nonsignificant increase in Loss−Gain SCR difference from Attend to Regulate (Attend=0.0089/$, Regulate=0.0128/$, t(14)=0.49, P<0.64 two-tailed paired t test).

    “whereas Nonregulators showed a nonsignificant increase (Attend = 0.0089 /$, Regulate = 0.0128 /$, t(14) = 0.49, P < 0.64 two-tailed paired t test)”
    Quote in the paperNot a substantial claim
    • Rests on an assumption: Skin conductance response is a valid measure of sympathetic nervous system activity and bodily arousal.
  • May combine two claims. 17
  • Classified as probably not a substantial claim. 18
  • The quote only partly states this claim. 1

  • May combine two claims.

    Findingown data
    § Results

    In Study 1, under Regulate, mean log(λ) was -0.0005 (SE=0.10), not significantly different from zero (t(29)=-0.005, n.s.), corresponding to mean λ=0.999.

    “The mean log(λ) value was −0.0005 (0.10), and was not significantly different from zero (t(29) = −0.005, not significant (n.s.)). This corresponded to a mean λ = 0.999.”
    Quote in the paperNot a substantial claim
    • Rests on an assumption: The quantitative parametric behavioral models conventionally used in economics accurately capture loss aversion, risk aversion, and choice consistency.

  • May combine two claims.

    Findingown data
    § Results

    In Study 1, the Regulate strategy had no significant effect on risk aversion ρ (t(29)=1.66, P<0.11) or logit sensitivity μ (t(29)=0.79, P<0.44).

    “An effect was observed for the loss aversion coefficient λ (t(29) = 3.64 P < 0.0011), but not for ρ (t(29) = 1.66 P < 0.11) or μ (t(29) = 0.79 P < 0.44).”
    • Also stated in: § Discussion · plain
      “No other measurements of behavior showed significant changes as a result of using the strategy.”
    Quote in the paperNot a substantial claim
    • Rests on an assumption: The quantitative parametric behavioral models conventionally used in economics accurately capture loss aversion, risk aversion, and choice consistency.

  • Probably not a substantial claim: may not pass S3 (load-bearing).

    Findingown data
    § Results

    In Study 1, individual λ values ranged from 0.41 to 3.91.

    “The range of parameter values were λ: 0.41–3.91, ρ: 0.37–1.23, and μ: 0.71–6.53.”
    Quote in the paperNot a substantial claim
    • Rests on an assumption: The quantitative parametric behavioral models conventionally used in economics accurately capture loss aversion, risk aversion, and choice consistency.

  • The quote only partly states this claim.

    Findingown data
    § Results

    In Study 1, the Regulate strategy significantly reduced the loss aversion coefficient λ relative to Attend (t(29)=3.64, P<0.0011).

    “An effect was observed for the loss aversion coefficient λ (t(29) = 3.64 P < 0.0011), but not for ρ (t(29) = 1.66 P < 0.11) or μ (t(29) = 0.79 P < 0.44).”
    • Also stated in: § Discussion · boosted
      “In Study 1, we showed that an intentional reinterpretive regulation strategy had a specific and strong effect in decreasing individuals' initial levels of loss aversion.”
    Quote in the paperSubstantial claim
    • Rests on an assumption: The quantitative parametric behavioral models conventionally used in economics accurately capture loss aversion, risk aversion, and choice consistency.

  • May combine two claims.

    Findingown data
    § Results

    In Study 2, a 2×2×2 repeated measures ANOVA on SCR revealed a trending interaction between Outcome, Strategy, and Group (F(1,27)=3.70, P<0.065), with no other interactions or main effects (all P's>0.29).

    “A 2 × 2 × 2 repeated measures ANOVA with factors of Outcome (Loss, Gain), Strategy (Attend, Regulate), and Group (Regulators, Nonregulators), revealed a trending interaction between all 3 factors (F (1, 27) = 3.70 P < 0.065), but no other interactions nor main effects (all P's > 0.29).”
    Quote in the paperSubstantial claim
    • Rests on an assumption: Skin conductance response is a valid measure of sympathetic nervous system activity and bodily arousal.

  • Probably not a substantial claim: may not pass S3 (load-bearing).

    Findingown data
    § Results

    In Study 1, there were 9 gain-seeking, 7 gain-loss neutral, and 14 loss-averse participants.

    “These values indicate that there are 9 gain seeking, 7 gain-loss neutral, and 14 loss averse participants in our sample, where gain seeking is defined as having a λ significantly less than 1, gain-loss neutral is defined as having a λ not significantly different from 1, and loss averse is defined as having a λ significantly greater than 1.”
    Quote in the paperNot a substantial claim
    • Rests on an assumption: The quantitative parametric behavioral models conventionally used in economics accurately capture loss aversion, risk aversion, and choice consistency.

  • May combine two claims.

    Findingown data
    § Results

    In Study 2, there was no significant effect of Regulate on ρ (t(28)=1.82, P<0.08) or μ (t(28)=1.40, P<0.17).

    “There was no significant effect on ρ (t(28) = 1.82 P < 0.08), or μ (t(28) = 1.40 P < 0.17).”
    Quote in the paperNot a substantial claim
    • Rests on an assumption: The quantitative parametric behavioral models conventionally used in economics accurately capture loss aversion, risk aversion, and choice consistency.

  • May combine two claims.

    Findingown data
    § Results

    In Study 2, mean Attend parameter estimates were λ=1.31 (0.13), ρ=0.88 (0.03), μ=2.97 (0.28); mean Regulate estimates were λ=1.15 (0.12), ρ=0.92 (0.03), μ=2.60 (0.23).

    “Mean Attend parameter estimates (with standard errors) were λ = 1.31 (0.13), ρ = 0.88 (0.03), and μ = 2.97 (0.28). Mean Regulate parameter estimates (with standard errors) were λ = 1.15 (0.12), ρ = 0.92 (0.03), and μ = 2.60 (0.23).”
    Quote in the paperSubstantial claim
    • Rests on an assumption: The quantitative parametric behavioral models conventionally used in economics accurately capture loss aversion, risk aversion, and choice consistency.

  • May combine two claims.

    Findingown data
    § Results

    In Study 1, likelihood ratio tests identified 15 of 30 subjects with significant changes in λ, 3 for ρ, and 2 for μ.

    “Of 30 subjects, 15 exceeded the criterion for changes in λ, 3 for changes in estimated ρ values, and 2 for changes in their estimated μ values.”
    Quote in the paperNot a substantial claim
    • Rests on an assumption: The quantitative parametric behavioral models conventionally used in economics accurately capture loss aversion, risk aversion, and choice consistency.

  • May combine two claims.

    Study design and conductown data
    § Results

    In Study 1, all estimated models had P<5×10−5, and 56 of 60 models had P<1×10−10, in likelihood ratio tests against a random choice model.

    “This showed that for subjects of Study 1 in both conditions (60 sets of parameters total), all estimated models had a P < 5 × 10−5, and 56 out of 60 models had a P < 1 × 10−10”
    Quote in the paperNot a substantial claim
    • Rests on an assumption: The quantitative parametric behavioral models conventionally used in economics accurately capture loss aversion, risk aversion, and choice consistency.

  • Probably not a substantial claim: may not pass S3 (load-bearing). May combine two claims.

    Study design and conductown data
    § Results

    In Study 1, counterbalancing (block order, gamble outcome, gamble order within block) had no effects on parameter estimates or the effectiveness of the Regulate strategy.

    “Counterbalancing (including block order, gamble outcome, and gamble order within block) had no effects on parameter estimates or the effectiveness of the Regulate strategy.”
    Quote in the paperNot a substantial claim

  • May combine two claims.

    Interpretationown data
    § Discussion

    Loss aversion and arousal responses to losses relative to gains are reliably and systematically affected by perspective-taking.

    “and that these measures are reliably and systematically affected by perspective-taking.”
    Quote in the paperSubstantial claim

  • Probably not a substantial claim: may not pass S3 (load-bearing).

    Premisecitation
    § Abstract

    Loss aversion is conceptualized as a multiplicative overweighting of losses relative to gains represented by parameter λ.

    “Loss aversion subsequently came to be conceptualized as a multiplicative overweighting of losses relative to gains represented by a parameter λ (21).”
    Quote in the paperNot a substantial claim0 of 1 sources checked
    • cites [21] Kahneman D, Tversky A. Prospect theory—Analysis of decision under risk. Econometrica. 1979;47:263–291. [Google Scholar] source

      Not checked in the free run.

  • Classified as probably not a substantial claim.

    Premisecitation
    § Abstract

    Losses loom larger than equivalent gains (loss aversion).

    “In 1979, Kahneman and Tversky (21) suggested that losses loom larger than equivalent gains, a property called “loss aversion.””
    Quote in the paperSubstantial claim0 of 1 sources checked
    • cites [21] Kahneman D, Tversky A. Prospect theory—Analysis of decision under risk. Econometrica. 1979;47:263–291. [Google Scholar] source

      Not checked in the free run.

  • Probably not a substantial claim: may not pass S3 (load-bearing).

    Premisecitation
    § Abstract

    Emotion plays a role in decision-making.

    “It is widely acknowledged that emotion plays a role in decision-making, drawing on evidence from numerous behavioral studies using emotional stimuli as well as physiological, neuroimaging, and lesion studies.”
    Quote in the paperNot a substantial claim0 of 5 sources checked
    • cites [6] Lerner JS, Small DA, Loewenstein G. Heart strings and purse strings: Carryover effects of emotions on economic decisions. Psychol Sci. 2004;15:337–341. doi: 10.1111/j.0956-7976.2004.00679.x. [DOI] [PubMed] [Google Scholar] source

      Not checked in the free run.

    • cites [7] Winkielman P, Berridge KC, Wilbarger JL. Unconscious affective reactions to masked happy versus angry faces influence consumption behavior and judgments of value. Pers Soc Psychol Bull. 2005;31:121–135. doi: 10.1177/0146167204271309. [DOI] [PubMed] [Google Scholar] source

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      Not checked in the free run.

  • Probably not a substantial claim: may not pass S3 (load-bearing).

    Premisecitation
    § Discussion

    Thaler et al. (25) applied an ecologically plausible situational manipulation based on the frequency of feedback for risky investments in a between-subjects design.

    “For example, a study by Thaler et al. (25) applied an ecologically plausible situational manipulation (based on the frequency of feedback for risky investments) in a between-subjects design.”
    Quote in the paperNot a substantial claim0 of 1 sources checked
    • cites Thaler et al. (25) Thaler RH, Tversky A, Kahneman D, Schwartz A. The effect of myopia and loss aversion on risk taking: An experimental test. Q J Econ. 1997;112:647–661. [Google Scholar]

      Not checked in the free run.

  • May combine two claims.

    Premisecitation
    § Discussion

    Professional sports card dealers, condominium investors (rather than owners), and experienced cab drivers show less apparent response to loss than less experienced agents.

    “Indeed, professional sports card dealers (45), condominium investors (rather than owners) (31), and experienced cab drivers (32) show less apparent response to loss than less experienced agents.”
    Quote in the paperNot a substantial claim0 of 3 sources checked
    • cites [45] List JA. Does market experience eliminate market anomalies? Q J Econ. 2003;118:41–71. [Google Scholar] source

      Not checked in the free run.

    • cites [31] Genesove D, Mayer C. Loss aversion and seller behavior: Evidence from the housing market. Q J Econ. 2001;116:1233–1260. [Google Scholar] source

      Not checked in the free run.

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      Not checked in the free run.

  • Probably not a substantial claim: may not pass S3 (load-bearing). May combine two claims.

    Premisecitation
    § Abstract

    Real-world data show loss-averse behavior in stock markets, pricing and purchasing of consumables and condominiums, and choice of work hours by cabdrivers.

    “This work has been supported by analyses of real world data that show similar behavior in, among other situations, stock markets (26–28), the pricing and purchasing of consumables (29, 30) and condominiums (31), and the choice of work hours by cabdrivers (32).”
    Quote in the paperNot a substantial claim0 of 6 sources checked
    • cites [26] Heisler J. Loss aversion in a futures market: An empirical test. Review of Futures Markets. 1994;13:793–826. [Google Scholar]

      Not checked in the free run.

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      Not checked in the free run.

    • cites [31] Genesove D, Mayer C. Loss aversion and seller behavior: Evidence from the housing market. Q J Econ. 2001;116:1233–1260. [Google Scholar] source

      Not checked in the free run.

  • May combine two claims.

    Interpretationcitation
    § Discussion

    Participants in our study anticipated their responses to gains and losses and chose accordingly.

    “Just as recent work demonstrating that individuals' anticipation of loss may shift their choices (38), it appears that participants in our study similarly anticipated their responses to gains and losses and chose accordingly (39).”
    Quote in the paperSubstantial claim0 of 1 sources checked
    • cites [39] Loewenstein G, Weber EU, Hsee CK, Welch N. Risk as feelings. Psychol Bull. 2001;127:267–286. doi: 10.1037/0033-2909.127.2.267. [DOI] [PubMed] [Google Scholar] source

      Not checked in the free run.

  • Probably not a substantial claim: may not pass S3 (load-bearing). May combine two claims.

    Premisecitation
    § Abstract

    Loss aversion appears to exist across both domains and species.

    “Loss aversion appears to exist across both domains and species”
    Quote in the paperNot a substantial claim0 of 1 sources checked
    • cites [33] Chen MK, Lakshminarayanan V, Santos L. How basic are behavioral biases? Evidence from capuchin monkey trading behavior. J Polit Econ. 2006;114:517–537. [Google Scholar] source

      Not checked in the free run.

  • Probably not a substantial claim: may not pass S3 (load-bearing).

    Premisecitation
    § Discussion

    This is not the first study to show the effect of perspective-taking on loss-averse behavior.

    “This is not the first study to show the effect of perspective-taking on loss-averse behavior.”
    Quote in the paperNot a substantial claim

  • Probably not a substantial claim: may not pass S3 (load-bearing).

    Premisecitation
    § Abstract

    Laboratory studies have demonstrated that humans can show loss aversion for objects such as mugs, money, and simulated investments.

    “Laboratory studies have since demonstrated that humans can show loss aversion for objects such as mugs (22), money (23), and simulated investments (24, 25).”
    Quote in the paperNot a substantial claim0 of 4 sources checked
    • cites [22] Kahneman D, Knetsch JL, Thaler RH. Experimental tests of the endowment effect and the coase theorem. J Polit Econ. 1990;98:1325–1348. [Google Scholar] source

      Not checked in the free run.

    • cites [23] Tversky A, Kahneman D. Advances in prospect-theory—cumulative representation of uncertainty. J Risk Uncertain. 1992;5:297–323. [Google Scholar] source

      Not checked in the free run.

    • cites [24] Gneezy U, Potters J. An experiment on risk taking and evaluation periods. Q J Econ 112. 1997;2:631–645. [Google Scholar] source

      Not checked in the free run.

    • cites [25] Thaler RH, Tversky A, Kahneman D, Schwartz A. The effect of myopia and loss aversion on risk taking: An experimental test. Q J Econ. 1997;112:647–661. [Google Scholar] source

      Not checked in the free run.

  • Probably not a substantial claim: may not pass S3 (load-bearing).

    Study design and conductnone given
    § Abstract

    The values in the choice set were selected a priori to allow accurate estimation of a range of possible values of λ, ρ, and μ.

    “The values in the set were selected a priori to allow accurate estimation of a range of possible values of λ, ρ, and μ.”
    Quote in the paperNot a substantial claim

  • Probably not a substantial claim: may not pass S2 (checkable), S4 (based).

    Interpretationreasoning
    § Abstract

    Loss aversion is an excellent candidate measure for examining the effect of intentional regulation strategies on emotion-related aspects of choice behavior.

    “loss aversion is an excellent candidate measure for examining the effect of intentional regulation strategies on emotion-related aspects of choice behavior.”
    Quote in the paperNot a substantial claim

  • Probably not a substantial claim: may not pass S2 (checkable), S3 (load-bearing), S4 (based).

    Interpretationnone given
    § Abstract

    The strategy is similar to other emotion regulation strategies in its reinterpretive nature, despite its content being more relevant to economic decisions.

    “This strategy is similar to other emotion regulation strategies in its reinterpretive nature, despite its content being more relevant to economic decisions.”
    Quote in the paperNot a substantial claim

  • Classified as probably not a substantial claim. May combine two claims.

    Premisecitation
    § Abstract

    Emotion regulation research suggests we have a degree of control over our affective state and can reduce or enhance the emotional impact of a given stimulus in real time.

    “research on emotion regulation suggests we have a degree of control over our affective state and can reduce or enhance the emotional impact of a given stimulus in real time (1).”
    Quote in the paperSubstantial claim0 of 1 sources checked
    • cites [1] Ochsner KN, et al. For better or for worse: Neural systems supporting the cognitive down- and up-regulation of negative emotion. NeuroImage. 2004;23:483–499. doi: 10.1016/j.neuroimage.2004.06.030. [DOI] [PubMed] [Google Scholar] source

      Not checked in the free run.

  • Probably not a substantial claim: may not pass S3 (load-bearing). May combine two claims.

    Study design and conductnone given
    § Abstract

    The conceptual nature of the strategies was emphasized and participants were thoroughly instructed and quizzed on all procedures.

    “The conceptual nature of the strategies was emphasized and participants were thoroughly instructed and quizzed on all procedures.”
    Quote in the paperNot a substantial claim

  • Probably not a substantial claim: may not pass S3 (load-bearing).

    Premisecitation
    § Discussion

    Temporally bracketing choices decreased the occurrence of behavior consistent with loss aversion.

    “They showed that temporally bracketing choices decreased the occurrence of behavior consistent with loss aversion [similar to results found by Gneezy and Potters (24)].”
    Quote in the paperNot a substantial claim0 of 2 sources checked
    • cites Thaler et al. (25) Thaler RH, Tversky A, Kahneman D, Schwartz A. The effect of myopia and loss aversion on risk taking: An experimental test. Q J Econ. 1997;112:647–661. [Google Scholar]

      Not checked in the free run.

    • cites Gneezy and Potters (24) Gneezy U, Potters J. An experiment on risk taking and evaluation periods. Q J Econ 112. 1997;2:631–645. [Google Scholar]

      Not checked in the free run.

  • Probably not a substantial claim: may not pass S3 (load-bearing).

    Study design and conductreasoning
    § Methods

    The behavioral and physiological data from the remaining 29 participants is presented.

    “The behavioral and physiological data from the remaining 29 participants is presented.”
    Quote in the paperNot a substantial claim

  • May combine two claims.

    Interpretationreasoning
    § Discussion

    We can change how we decide, and although we may be sensitive to losses, we can make ourselves less so.

    “We can change how we decide, and although we may be sensitive to losses, we can make ourselves less so.”
    Quote in the paperSubstantial claim
    • Rests on an assumption: The Regulate strategy represents what a professional trader might do when making portfolio-style decisions.

  • May combine two claims.

    Interpretationown data
    § Discussion

    Whatever 'fear of loss' may exist is not so basic as to be immutable, but is instead subject to regulation.

    “However, our results also support the latter, “judgmental error,” interpretation to some extent by demonstrating that cognitive strategies can systematically reduce loss aversion behaviorally and physiologically; so whatever “fear of loss” may exist is not so basic as to be immutable, but is instead subject to regulation.”
    Quote in the paperSubstantial claim
    • Rests on an assumption: The Regulate strategy represents what a professional trader might do when making portfolio-style decisions.
31 of 31

  • The paper relies on this without support.

    Skin conductance response is a valid measure of sympathetic nervous system activity and bodily arousal.

    “their skin conductance response (SCR, a measure of sympathetic nervous system activity) was recorded during the choice task as a measure of arousal.”

  • The paper relies on this without support.

    The quantitative parametric behavioral models conventionally used in economics accurately capture loss aversion, risk aversion, and choice consistency.

    “modeled on an individual participant basis with quantitative parametric behavioral models conventionally used in economics.”

  • The paper relies on this without support.

    The Regulate strategy represents what a professional trader might do when making portfolio-style decisions.

    “This strategy was intended to be what a professional trader might do when making many portfolio-style decisions.”

  • The paper relies on this without support.

    The Attend strategy mirrors the everyday approach to decisions for most people.

    “We conceived of this instruction to mirror the everyday approach to decisions for most people—that is, one at a time, individually.”

  • The paper relies on this without support.

    Differential physiological arousal responses to loss and gain reflect the hedonic impact of those outcomes.

    “Our results support the former, “hedonic,” interpretation, that losses do hurt more than gains feel good, because differential physiological arousal responses are linked to actual feedback about loss and gain, and therefore, at least to some degree, loss aversion may not be a judgment error.”
5 of 5

Claims other papers make about this one

Each is checked against this paper’s own text: does it say what the citing paper says it does?

  • Increased cognitive control of the autonomic emotional responses normally elicited by losses significantly reduced the susceptibility to loss aversion.

    “a recent study found that increased cognitive control of the autonomic emotional responses normally elicited by losses significantly reduced the susceptibility to loss aversion (17).”

    From Amygdala damage eliminates monetary loss aversion (2010) · cites this paper as [17]

  • Neither amygdala-lesioned participant exhibits loss aversion; S.M. had λ=0.76 and A.P. had λ=1.06, whereas control means were 1.52 and 1.76.

    “This analysis yielded λ = 0.76 for S.M., and a mean λ for the S.M. control group of 1.52 (SEM = 0.19). For A.P., λ = 1.06 whereas the mean λ for the A.P. control group was 1.76 (SEM = 0.12).”

    From Amygdala damage eliminates monetary loss aversion (2010) · cites this paper as [17]

Statistics recomputed

Every reported test result, recomputed from its test statistic and degrees of freedom. A result shows as not adding up only once an independent check has confirmed it.

  • Not confirmedt(28) = 0.24reported p < .4 · recomputed p = .812

    “t(28) = 0.24, p < .40”

  • Consistentt(29) = 2.113reported p < .05 · recomputed p = .043

    “t(29) = 2.113, p < .05”

  • Consistentt(28) = 1.89reported p < .035 · recomputed p = .069

    “t(28) = 1.89, p < .035”

    The paper states a one-tailed test

  • Consistentt(13) = 2.04reported p < .031 · recomputed p = .062

    “t(13) = 2.04, p < .031”

    The paper states a one-tailed test

  • Consistentt(14) = 0.49reported p < .64 · recomputed p = .632

    “t(14) = 0.49, p < .64”

  • Consistentr(27) = 0.394reported p < .035 · recomputed p = .034

    “r(27) = 0.394, p < .035”

  • Consistentr(27) = 0.403reported p < .031 · recomputed p = .030

    “r(27) = 0.403, p < .031”

7 of 7

Self-check

Percentages, sums and reported differences re-computed from the paper’s own numbers.

Self-check results appear here once an independent check has confirmed them.

Cites

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Cited by

Sorted by citations

Related

Authors
Sokol-Hessner, P., Hsu, M., Curley, N. G., Delgado, M. R., Camerer, C. F., & Phelps, E. A.
Affiliations
  • Department of Psychology, New York University, 6 Washington Place, New York, NY 10003;
  • University of Illinois Urbana-Champaign (US)
  • New York University (US)
  • Rutgers, The State University of New Jersey (US)
  • California Institute of Technology (US)
ORCID
Venue
Proceedings of the National Academy of Sciences
Publisher
National Academy of Sciences
Published
2009-03-31
Volume
106
Issue
13
Pages
5035-5040
ISSN
  • 0027-8424 (ISSN-L)
  • 1091-6490
DOI
10.1073/pnas.0806761106
PMC
PMC2656558
OpenAlex
W2096193633
Cited by
452
References
60
Citations by year
2026: 15 · 2025: 16 · 2024: 24 · 2023: 36 · 2022: 27 · 2021: 43 · 2020: 24 · 2019: 30 · 2018: 32 · 2017: 26 · 2016: 37 · 2015: 34 · 2014: 30 · 2013: 28 · 2012: 20
FWCI
10.33
Type
journal article
Language
en
Open access
Locations
  • Proceedings of the National Academy of Sciences (publishedVersion)
  • PubMed Central (publishedVersion)
  • PubMed (publishedVersion)
  • CaltechAUTHORS (California Institute of Technology) (submittedVersion)
Topics
  • Social Sciences › Decision Sciences › General Decision Sciences › Decision-Making and Behavioral Economics
  • Life Sciences › Neuroscience › Cognitive Neuroscience › Neural and Behavioral Psychology Studies
  • Social Sciences › Safety Research › Experimental Behavioral Economics Studies
Keywords
loss aversion, cognitive emotion regulation, perspective taking, arousal, skin conductance response, physiological arousal, decision-making, individual differences, merchants
MeSH terms
Arousal, Avoidance Learning, Choice Behavior, Decision Making, Emotions, Humans, Pleasure-Pain Principle, Models, Economic

About these checks

Registry, retraction, Cites and statistics results are computed, not judged, with one exception: a printed reference that no index lists is read once by a model before it counts as a citation error. Claims are extracted by a model and kept only when their quote appears verbatim in the text; each cited source is then checked, with a model’s help, for whether it says what the claim relies on. Those verdicts can be wrong — read the claim’s quote and the cited source before relying on one.

Claims read by deepseek-v4.1-flash under definition version 3 (extract-v3) on 2026-10-09.

Classified by jev-1.13-20260917 (gold-guideline-v0.2) on 2026-10-09.

Statistics and arithmetic are recomputed, not judged.

Confidence bands are shown only for fields calibrated on our annotated test set. None is calibrated yet, so no band is shown.

What counts as a claim ›How we measure confidence ›How we check this ›

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