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

Re: Loss aversion is not supported by the evidence

#111

Post by MarkMc » Mon, Aug 06, 2018, 4:58 AM UTC

knn wrote: post #31

I'm picking through the author's paper and I don't buy this conclusion. I have a bone to pick with his evidence: for example, he makes a comparison between "willingness to expend time to drive to obtain an accidentally left behind unused, new-condition notebook (vs. willingness to expend driving time to obtain a new notebook at no financial cost)". The extent of the former he denotes as WTP-Retain and the latter WTP-…

Well the test subject has the option to 'undo' the loss. So the loss can be seen as optional for the purposes of the experiment.

Could we settle the argument by reading the definition of loss aversion to 10 people and asking each person whether the author's experiment measures loss aversion?

Re: Loss aversion is not supported by the evidence

#112

Post by MarkMc » Mon, Aug 06, 2018, 5:17 AM UTC

The article's author David Gal claims that 'loss aversion' is a fallacy. But in the book Thinking Fast and Slow, Daniel Kahneman says that the following experiment demonstrates loss aversion.

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People are randomly given one of two problems:

Probem A: In addition to whatever you own, you have been given $1,000. You are now asked to choose one of these options: 50% chance to win $1,000 OR get $500 for sure

Problem B: In addition to whatever you own, you have been given $2,000. You are now asked to choose one of these options: 50% chance to lose $1,000 OR lose $500 for sure.

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According to Kahneman, many more people will take the gamble when it is framed as potential win (Problem A) rather than as a potential loss (Problem B).

So is Gal saying this experiment is not reproducible or that it doesn't demonstrate loss aversion?

Re: Loss aversion is not supported by the evidence

#113

Post by Vinnl » Mon, Aug 06, 2018, 6:27 AM UTC

gboudrias wrote: post #108

Vinnl wrote: post #104

Earlier quoted context omitted.

But if only potential consequences matter regardless of the odds, then you get to the problem of Pascal's Wager [0]: it's best to assume God exists, because the consequences of being wrong and not doing that (going to hell) are far higher than the consequences of being right and doing it. [0] https://en.wikipedia.org/wiki/Pascal%27s_Wager

Pascal's wager is mainly faulty because it relies on a complete lack of information, unlike climate change where we have some information. If we had any clues at all that any existing gods are benevolent, it would most definitely be the right choice from a pragmatic perspective. If we circle back to climate change as an example, it's hard to be certain but that's still a lot of clues telling us we should do something…

Right, so how about AI then? There's a very small risk that AI would become extremely malicious and wipe out the entire race. In other words, the risk is infinite. Since there is some (albeit very little) information that this might happen, should we spend all our resources on preventing that?

Re: Loss aversion is not supported by the evidence

#114

Post by dosy » Mon, Aug 06, 2018, 4:37 PM UTC

wpietri wrote: post #86

dosy wrote: post #45

On the face of it, and with the benefit of hindsight if the paper's presented theory is valid, if loss aversion as dominant motivation were a thing wouldn't human civilization have never progressed beyond hunter gatherer nomads? Doesn't the fact that we keep growing and progressing as a species even tho the getting of these gains exposes us to risks, not just in the getting there, but once we have arrived, the "curse…

Not really. Loss aversion doesn't mean complete refusal to face loss or complete lack of interest in gains, it just means that we weight losses more heavily than gains. I also don't think anybody's claiming it's a dominant motivation, just a common characteristic.

Interesting perspective. It doesn't really relate to how I think of it. Useful to know that's how you think.

Re: Loss aversion is not supported by the evidence

#115

Post by gboudrias » Mon, Aug 06, 2018, 10:42 PM UTC

Vinnl wrote: post #113

gboudrias wrote: post #108

Earlier quoted context omitted.

Pascal's wager is mainly faulty because it relies on a complete lack of information, unlike climate change where we have some information. If we had any clues at all that any existing gods are benevolent, it would most definitely be the right choice from a pragmatic perspective. If we circle back to climate change as an example, it's hard to be certain but that's still a lot of clues telling us we should do something…

Right, so how about AI then? There's a very small risk that AI would become extremely malicious and wipe out the entire race. In other words, the risk is infinite. Since there is some (albeit very little) information that this might happen, should we spend all our resources on preventing that?

I don't follow?