Effects of Loss Aversion Research Paper Example | Topics and Well Written Essays - 1000 words

Effects of Loss Aversion - Research Paper ExampleThis gives an report of curvilinear shape of tantrum theory. The same philosophers argue that people prefer risks to exposing themselves to losses. This theory also explains sink cost theory. The theory applies that, when one lose $100, he will be more satisfied than a person who losses $100 windf on the whole. In reference to market, we make use of trial periods or rebates with the get of taking advantage of the tendency of the buyers. This is to value the gods more than the incorporation in the status quo (Kahneman, Knetsch, & Thaler 10). It is crucial mark off that, despite the fact that transactions argon framed on losses or gains, is significant to confound the following calculation. Is there a discount or a surcharge? Change in value is differently framed and has impacts on loss evil. In reference traditional economist, loss crime in concert with other endowment effect is irrational. This is the reason why they ate high ly essential in the business line of behavioral finance and marketing. This effect was demonstrated together with other effects in a client reaction study, which related insurance policies and price changes. From the study, they found that prices raises customer reaction twice in aspect of its alteration (Kahneman, Knetsch, & Thaler 10). Research question This proposal encompasses effects of loss aversion. It also contains different ideas relating to the theory. Objectives To lean all the effects and impacts of loss aversion Methodology This proposal entails ideas from different individuals. This is to ensure that the look for is all locomote and is suit for further empirical studies. In reference to results from different philosophers, there is a need to habituate different methodologies to ensure to enhance reliability and completeness of the research. These methodologies entail questionnaires, experiments, interviews, surveys among others. These methodologies are applied in different handle of study, in respect with their fitness. In this case, questionnaires will be applicable in instances, where there is some train of specification. The setting of questionnaires will be different in reference with the target group. Questionnaires and interviews are the key research methodologies. However, interviewing is effective in areas where the research expected is to be analyzed with some level of formality. Other methods are supplements of the above methodologies. Literature review Colin Camerer is Rea and Lela Axline professor of business economics at California institute of technology. Camerer investigates conclusion making with regards to psychophysical considerations. His thesis in this journal is that St. Petersburg paradox might be explained using loss aversion without concave utility. He goes further to defend it by saying it is theoretically useful is a article of belief that can explain many puzzles economically, given that it has the correct psyc hological foundation. This was published by the American marketing association (Kahneman, Knetsch, & Thaler 11). The authors main interest is in finding out whether loss aversion is an expression of fear, or a stable preference fear and properties in loss aversion. According to Camerer, prospect theory has the power to explain how people value risk. A fruitful and parsimonious alternative, to the expected theory of utility is introduced by prospect theory. It as well introduces psychophysical and perceptual perspective in thinking virtually money, goods and risks. In the findings is a