Economics 1st Edition by Dean Karlan,Jonathan Morduch

Exercise 15

Determine whether each of the following represents loss aversion.
a. Nearing retirement, an investor chooses investments with lower return and lower risk, because she wants to make sure she has a certain amount of money available in five years.
b. A gambler refuses to play a game in which if heads shows up after a coin toss he will win $40, but if tails shows up he will lose $50.
c. Offered a brand-new blanket that is twice as comfortable and cute as her old one- the only two criteria she cares about in a blanket-a toddler refuses to give up her old blanket.