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Your money and your life: risk attitudes over gains and losses

Oliver, Adam (2018) Your money and your life: risk attitudes over gains and losses. Journal of Risk and Uncertainty, 57 (1). 29 - 50. ISSN 0895-5646

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Identification Number: 10.1007/s11166-018-9284-4


Prospect theory is the most influential descriptive alternative to the orthodox model of rational choice under risk and uncertainty, in terms of empirical analyses of some of its principal parameters and as a consideration in behavioural public policy. Yet the most distinctive implication of the theory – a fourfold predicted pattern of risk attitudes called the reflection effect – has been infrequently studied and with mixed results over money outcomes, and has never been completely tested over health outcomes. This article reports tests of reflection over money and health outcomes defined by life years gained from treatment. With open valuation exercises, the results suggest qualified support for the reflection effect over money outcomes and strong support over health outcomes. However, in pairwise choice questions, reflection was substantially ameliorated over life years, remaining significant only for treatments that offered short additional durations of life.

Item Type: Article
Official URL:
Additional Information: © 2018 The Authors
Divisions: Social Policy
LSE Health
Subjects: B Philosophy. Psychology. Religion > BF Psychology
JEL classification: B - Schools of Economic Thought and Methodology > B2 - History of Economic Thought since 1925 > B21 - Microeconomics
C - Mathematical and Quantitative Methods > C1 - Econometric and Statistical Methods: General > C12 - Hypothesis Testing
C - Mathematical and Quantitative Methods > C9 - Design of Experiments > C91 - Laboratory, Individual Behavior
Date Deposited: 25 Jun 2018 10:36
Last Modified: 20 Oct 2021 01:28

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