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by mrow84
3839 days ago
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It seems to me that you can reverse the sense of the author's conclusion by changing the initial conditions: The change in utility by going from 2k up to 10k (~ +1.3) is significantly more than the change in utility by going from 18k down to 10k (~ -0.55). In the simple model provided the change in utility caused by a change in wealth, positive or negative, depends on your starting wealth. This is different to the "pop definition" of loss aversion, which seems to be making a claim that the ratio of the change in utility between gains and losses is approximately independent of your starting point. I should point out that I don't know what the correct formulation of loss aversion is, it just seems to me that the argument presented is a bit weak. |
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