The impact of (social) anchors on Prospect Theory's value function
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In: Quarterly Review of Economics and Finance, Vol. 98, 101916, 12.2024.
Research output: Journal contributions › Journal articles › Research › peer-review
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TY - JOUR
T1 - The impact of (social) anchors on Prospect Theory's value function
AU - Krull, Sebastian
AU - Loschelder, David D.
AU - Pelster, Matthias
N1 - Publisher Copyright: © 2024 The Author(s)
PY - 2024/12
Y1 - 2024/12
N2 - Anchoring impacts risk-taking decisions. This paper provides experimental evidence (n = 744) that (social) anchors shift the Prospect Theory's value function (Kahneman and Tversky, 1979; Tversky and Kahneman, 1992). We observe that extreme (social) anchors lead to shifts in the value function, indicating a change in risk-taking. Anchors that are in line with risk-averse (risk-seeking) behavior lead, relative to the baseline, to more risk-averse (risk-seeking) decisions. Our findings are similar for social and non-social environments.
AB - Anchoring impacts risk-taking decisions. This paper provides experimental evidence (n = 744) that (social) anchors shift the Prospect Theory's value function (Kahneman and Tversky, 1979; Tversky and Kahneman, 1992). We observe that extreme (social) anchors lead to shifts in the value function, indicating a change in risk-taking. Anchors that are in line with risk-averse (risk-seeking) behavior lead, relative to the baseline, to more risk-averse (risk-seeking) decisions. Our findings are similar for social and non-social environments.
KW - Anchoring
KW - Decisions under risk
KW - Peer effects
KW - Risk-taking
KW - Social interactions
KW - Business psychology
KW - Management studies
UR - http://www.scopus.com/inward/record.url?scp=85203144824&partnerID=8YFLogxK
U2 - 10.1016/j.qref.2024.101916
DO - 10.1016/j.qref.2024.101916
M3 - Journal articles
AN - SCOPUS:85203144824
VL - 98
JO - Quarterly Review of Economics and Finance
JF - Quarterly Review of Economics and Finance
SN - 1062-9769
M1 - 101916
ER -