Loss aversion is not supported by the evidence • Hacker News Board

Re: Loss aversion is not supported by the evidence

#51

Post by watwut » Sun, Aug 05, 2018, 9:23 AM UTC

vezycash wrote: post #33

Jweb_Guru wrote: post #22

Earlier quoted context omitted.

This is not loss aversion and is explicitly covered in the article.

Whether my example was stated explicitly in the article is irrelevant. What's important is the primary motive behind an action. In fact, strategy in military, business and soccer is divided into two - offensive and defensive. Offensive strategies are primarily motivated by gain. Defensive - by turf protection, prevent loss of market, or prevent a goal. Both strategies use similar, virtually the same tools. And like l…

The discussion is about loss aversion phenomenom as defined and used in psychology. It is not about what you intuitively guessed from how it sounded like to you.

But also, you horribly simplified military and soccer strategies too. Fun fact: army can decide for offensive strategy, because defense would end up in bigger losses. They may also go for defensive strategy despite bigger loss, bc some other reason.

Lastly, no not every kill to protect yourself is self defense. That is not how law and sentencing works.

Re: Loss aversion is not supported by the evidence

#52

Post by jpttsn » Sun, Aug 05, 2018, 9:33 AM UTC

throwawaymath wrote: post #8

Hmm... So here is an interesting thought experiment. Suppose you take a person with some appreciable intelligence (at least average) but no particular knowledge about a certain topic. In this instance, we'll let that topic be psycology. Now we present this person with an unfortunate dilemma. For a particular hypothesis, they observe a significant amount of peer reviewed literature asserting empirical evidence in the…

Abstaining from the general case truth frees up time for figuring out some interesting special cases.

I don’t know the best diet for the general population. I know roughly what works for me.

I don’t know how microwaves work. I know how my microwave oven works.

Re: Loss aversion is not supported by the evidence

#53

Post by judofyr » Sun, Aug 05, 2018, 9:37 AM UTC

nothrabannosir wrote: post #47

judofyr wrote: post #40

Earlier quoted context omitted.

> The article brings absolutely no new information to the table. Did you read the paper? It's not a paper that "brings new information to the table", it's a paper which presents recent experiments and tries to show that there is little scientific evidence of loss aversion. > The basic principle behind loss aversion is simple. Huh? I don't understand what you're saying? You're saying that "loss aversion" is simple, bu…

> Did you read the paper? … Huh? … you should be aware that … I have no skin in this one but I would like to call this out: these comments make an argument combative. It pushes people up a tree and makes it hard to focus on the facts. Imagine user vezycash actually was swayed by your argument; how easy would it be for them to say, hey, you’re right? Pretty hard after all those comments, because it ties in their pride…

Yeah, I see how this turns an argument combative and that wasn't my intention. I don't think there's anything wrong with vezycash's point of view, in fact I completely agree with most/all of his points :-)

There is something to be said about "Did you read the paper?" though. We have here an article where an author has published a rather large article (59 pages) and done a substantial amount of research (quoting over 80 other published papers). I don't expect everyone to read all of that, but I wish people were more upfront about whether they're talking generally about the topic or discussing the actual story.

Like, I honestly wonder "Did you read the paper?" not because I expect everyone to read the paper, but because it means we can have a more constructive discussion. If you haven't read the paper and is confused about what the author means then I can try to find quotations that better explain the author's opinion. Or maybe we can discuss the general topic (ignoring the story).

Re: Loss aversion is not supported by the evidence

#54

Post by taneq » Sun, Aug 05, 2018, 10:01 AM UTC

nothrabannosir wrote: post #47

judofyr wrote: post #40

Earlier quoted context omitted.

> The article brings absolutely no new information to the table. Did you read the paper? It's not a paper that "brings new information to the table", it's a paper which presents recent experiments and tries to show that there is little scientific evidence of loss aversion. > The basic principle behind loss aversion is simple. Huh? I don't understand what you're saying? You're saying that "loss aversion" is simple, bu…

> Did you read the paper? … Huh? … you should be aware that … I have no skin in this one but I would like to call this out: these comments make an argument combative. It pushes people up a tree and makes it hard to focus on the facts. Imagine user vezycash actually was swayed by your argument; how easy would it be for them to say, hey, you’re right? Pretty hard after all those comments, because it ties in their pride…

Just to back this up, 'don't imply that someone didn't read the article' is actually in the HN guidelines.

Re: Loss aversion is not supported by the evidence

#55

Post by giergirey » Sun, Aug 05, 2018, 10:07 AM UTC

vkou wrote: post #17

throwawaymath wrote: post #8

Hmm... So here is an interesting thought experiment. Suppose you take a person with some appreciable intelligence (at least average) but no particular knowledge about a certain topic. In this instance, we'll let that topic be psycology. Now we present this person with an unfortunate dilemma. For a particular hypothesis, they observe a significant amount of peer reviewed literature asserting empirical evidence in the…

There is no alternative to 1) or 2). You either have to follow consensus of the experts, or, to go contrary to consensus, you must understand the consensus well enough to be one of the experts. Down any other road lies pop-sci nonsense. It's incredibly easy to be a wrong contrarian, when you don't actually understand what you are attacking.

I think you're missing option 3, which is to avoid drawing a conclusion either way - assume that there's no definite answer, and that the experts' expertise is too narrow to support using their consensus outside small studies on college students buying and selling chocolate bars.

In this case I'm happy to conclude that it's not clear if people do systematically make poor judgements on important issues due to an in-built "loss aversion" heuristic.

Re: Loss aversion is not supported by the evidence

#56

Post by judofyr » Sun, Aug 05, 2018, 10:17 AM UTC

WalterBright wrote: post #43

vezycash wrote: post #38

Earlier quoted context omitted.

Big words don't count as evidence. The article brings absolutely no new information to the table. Heck, I think this article's a clickbait. The basic principle behind loss aversion is simple. What's the primary motive behind an action - Running away or running towards? Prevention or gain. For instance. Yesterday an article about American child care was on HN. American parents are acting primarily to PREVENT injury, d…

To me, loss aversion was amply illustrated by a "King of Cars" episode, a reality show at a car dealership. The manager would hand out $100 bills to the salesmen in the morning, with the proviso that if they sold a car that day, they got to keep the C note on top of their commission. He'd found they worked much harder to retain the note once it was in their hands, than if he offered a bonus of $100 at the end of the…

That's a good example, but there's many factors at play here. For instance:

- Loss aversion

- Trust (i.e. the manager believes in you): When we hear the word "bonus" we often think "that's something that happens 10% of the days". However, when the manager is giving you the money at the beginning of the day they're saying "I think you can do this today. I might as well give it you already." The manager very clearly shows that they believe in you, and they probably know what they're doing.

- The prize is visible: We know from many examples that humans become more motivated when they can physically see their prize. One part of this trick is that you have the note in your pocket. Maybe you even take it out a few times during the day.

There's a few ways to test what factor is most important. For instance, you would expect the trust-factor to fade over time because you'll realize that the manager gives you the note regardless of their faith/belief in that you can make it (there's nothing special about "this day" or "this employee"). You could also replace the $100 note with a more neutral coupon that says "$100 bonus". This makes the prize less visible, but we should still value it as $100. Or maybe there's a checkbox on a sheet inside the office which says "Tick off if bonus not reached". If the effect goes away, then the visibility-factor is stronger than the loss-aversion-factor.

This is my main beef with the pop culture around "loss aversion" (and other psychological terms): There's so many interesting things to discuss around it, but we so badly want to combine everything into one simple buzz word.

Re: Loss aversion is not supported by the evidence

#57

Post by jl2718 » Sun, Aug 05, 2018, 10:21 AM UTC

I think the whole point of Thaler’s assertion is that loss aversion is a type 1 bias, so will be demonstrated despite whatever people say when using their type 2 reasoning.

Re: Loss aversion is not supported by the evidence

#58

Post by jkabrg » Sun, Aug 05, 2018, 10:47 AM UTC

vezycash wrote: post #46

judofyr wrote: post #40

Earlier quoted context omitted.

> The article brings absolutely no new information to the table. Did you read the paper? It's not a paper that "brings new information to the table", it's a paper which presents recent experiments and tries to show that there is little scientific evidence of loss aversion. > The basic principle behind loss aversion is simple. Huh? I don't understand what you're saying? You're saying that "loss aversion" is simple, bu…

As complex as gravity and electricity are, the underlying principles are simple. Same with loss aversion. Money isn't the only or biggest motivator. Take a good common example of loss aversion - admitting being wrong. Why do people find it difficult to admit that they are wrong? What's at stake here? Reputation, respect, pride, even money. 100 scientists vs Einstein is a classic example of this. Pointless wars have b…

The arguments you made don't challenge what the article says one bit.

The loss aversion hypothesis is the hypothesis that given the choice between either of the following two scenarios:

  - Having an object x and then risk losing it.
  - Being offered an object x but risk not getting it.

people are more "motivated" by the first than by the second. The claim moreover is that:

  - This is a universal motivator, which means it must explain "economic behavior" (which you mention) as well as anything
 else. The fact that -- as the article says -- people prefer *keeping* a stock which is just as likely to lose in value as
 to gain, is a *perfect* example to illustrate that it is *not* a universal motivator.
  - That it is not rational. There are cases where losing something, like for instance money, is *truly* more damaging
 than gaining the equivalent amount of money. For example, if I lost $100,000 it would be much more devastating than if I
 gained $100,000 -- in this scenario, it's not a psychological *bias* but in fact a completely rational belief. This example
 is in the article. You can not use examples like this one to argue in favour of "loss aversion", because there would be no
 evidence of an irrational bias.

Also, the fact that you keep applying the "loss aversion" hypothesis as broadly as possible, to things like wars and arguments, suggests you're assuming it applies everywhere. What about the stock example, which is mentioned in the article? That ought to prove you wrong, no?

Re: Loss aversion is not supported by the evidence

#59

Post by ratacat » Sun, Aug 05, 2018, 10:59 AM UTC

kelnage wrote: post #23

dwaltrip wrote: post #9

Earlier quoted context omitted.

Thanks for the phrase "incessant overgeneralization" -- I didn't even realize I was looking for that. It seems that this is something the social sciences are inherently at risk of, given how closely the topics are to our everday lives.

I’d say it’s true of most knowledge, regardless of domain. AI seems like a great candidate in computer science, for example.

Oh god yes! I see it often in our perceptions of "the other" as well. Other cities, other societies, other places....

Re: Loss aversion is not supported by the evidence

#60

Post by lolc » Sun, Aug 05, 2018, 11:05 AM UTC

I don't find the listed examples convincing. Especially:

> And people are not particularly likely to sell a stock they believe has even odds of going up or down in price (in fact, in one study I performed, over 80 percent of participants said they would hold on to it).

How naïve is that? We're not interested in what people said they would do. We want to know what they did!