Working Paper No. 976

Deciding for Others Reduces Loss Aversion

Published: September 17, 2013Pages: 38Keywords: Risk taking; Loss aversion; ExperimentJEL-codes: C91; D03; D81; G02
Published version

Deciding for Others Reduces Loss Aversion Ola Andersson, Håkan J. Holm, Jean-Robert Tyran and Erik Wengström


We study risk taking on behalf of others, both with and without potential losses. A large-scale incentivized experiment is conducted with subjects randomly drawn from the Danish population. On average, decision makers take the same risks for other people as for themselves when losses are excluded. In contrast, when losses are possible, decisions on behalf of others are more risky. Using structural estimation, we show that this increase in risk stems from a decrease in loss aversion when others are affected by their choices.

Ola Andersson

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ola.andersson@ifn.se

Interdisciplinary European Studies

The European Union in a Changing World Order

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This book explores how the European Union responds to the ongoing challenges to the liberal international order. These challenges arise both within the EU itself and beyond its borders, and put into question the values of free trade and liberal democracy. 

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