In this report, we will examine the relationship between loss aversion in situations of financial loss and gain and financial expertise. Loss aversion takes into consideration the outcome whereas risk aversion does not. Risk-averse individuals prefer lower returns with known risk instead of higher returns with unknown risk (The Economic Times, 2022). In other words, risk-averse individuals dislike risk regardless of the outcome. Our topic will focus on loss aversion as we intend to experiment with variables beyond the personality of individuals.
by Parastu Basaran, Rima Boudali, Christopher Chammas, Nia Pietrobruno and Amanda Urgolo