Prospect Theory proposed that the (dis)utility of losses is always more than gains due to a phenomena called ‘loss-aversion’, a result obtained in multiple later studies over the years. However, some researchers found reversed or no loss-aversion for affective judgments of small monetary amounts but, those findings have been argued to stem from the way gains versus losses were measured. Thus, it was not clear whether loss-aversion does not show with affective judgments for smaller magnitudes, or it is a measurement error. This paper addresses the debate concerning loss-aversion (in the prospect theoretic sense) and judgments about the intensity of gains and losses. We measured affective prospective judgments for monetary amounts using measurement scales that have been argued to be suitable for measuring loss-aversion and hence rule out any explanations regarding measurement. Both in a gambling scenario and in the context of fluctuating prices, potential losses never loomed larger than gains for low magnitudes, indicating that it is not simply a measurement error. Moreover, for the same participant, loss aversion was observable at high magnitudes. Further, we show that loss-aversion disappears even for higher monetary values, if contextually an even larger anchor is provided. The results imply that Prospect Theory’s value function is contextually dependent on magnitudes.
Mukherjee, S., Sahay, A., Pammi, V. S. C., & Srinivasan, N. (2017). Is loss-aversion magnitude-dependent? Measuring prospective affective judgments regarding gains and losses. Judgment and Decision Making, 12(1), 81-89. [Download PDF]
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With continuous growth in information aggregation and dissemination, studies on privacy preferences are important to understand what makes people reveal information about them. Previous studies have demonstrated that short-term gains and possible monetary rewards make people risk disclosing information. Given the malleability of privacy preferences and the ubiquitous monetary cues in daily lives, we measured the contextual effect of reminding people about money on their privacy disclosure preferences. In experiment 1, we found that priming money increased willingness to disclose their personal information that could be shared with an online shopping website. Beyond stated willingness, experiment 2 tested whether priming money increases propensity for actually giving out personal information. Across both experiments, we found that priming money increases both the reported willingness and the actual disclosure of personal information. Our results imply that not only do short-term rewards make people trade-off personal security and privacy, but also mere exposure to money increases self-disclosure.
Mukherjee, S., Manjaly. J.A ., & Nargundkar, M. (2013). Money makes you reveal more: Consequences of monetary cues on preferential disclosure of personal information. Frontiers in Psychology 4:839. doi: 10.3389/fpsyg.2013.00839
The relationship between money and happiness has always been one of hide and seek. Does having more money lead to greater life-satisfaction? Literature so far directed to two opposing directions. Some studies show that greater income leads to greater life-satisfaction, while others show otherwise. Economic theories on happiness suggest that with greater income happiness increases while psychological theories suggest that interpersonal relationships and health concerns are major components of life-satisfaction.
We decided to adopt a novel approach to study the relationship between money and life-satisfaction. Instead of focusing on the actual financial background, students were shown pictures of money to activate the concept of money in the mind. This procedure is called priming in social science research. Students were asked to rate their own life-satisfaction on a scale and were also asked to predict happiness and life-satisfaction for students at new Indian Institutes of Technology (IITs) and at old IITs. Half of the students (money group) were given this task on a paper which had pictures of money in the background. Another half (non-money group) completed the same task on papers which had a scrambled version of the same picture in the background that was beyond recognition. Two such experiments were conducted with students at IIT Gandhinagar and IIT Bombay. It was found that the background pictures did not affect self-satisfaction judgments among students both at IIT Gandhinagar and IIT Bombay. Monetary backgrounds however increased predicted differences in life-satisfaction between new and old IIT students at both the IITs. In fact, money lowered the life-satisfaction judgments of students at new IITs. The authors attributed the findings to the market-pricing mode of thought that may be brought on by mere reminders of money. Money might activate uncertainty about life in the campus of the new IITs, both among students who study themselves in a new IIT or in an old IIT. The researchers think that such kind of research would help understand student life-satisfaction and aid educational policies. It is interesting to find that simply activating the concept of money might change our beliefs and expectations.
Mukherjee, S., Nargundkar, M., & Manjaly, J.A. (2014). Monetary primes increase differences in predicted life-satisfaction between new and old Indian Institutes of Technology (IITs). Psychological Studies, 59(2), 191-196. doi:10.1007/s12646-014-0259-5