View Item 
        •   Utrecht University Student Theses Repository Home
        • UU Theses Repository
        • Theses
        • View Item
        •   Utrecht University Student Theses Repository Home
        • UU Theses Repository
        • Theses
        • View Item
        JavaScript is disabled for your browser. Some features of this site may not work without it.

        Browse

        All of UU Student Theses RepositoryBy Issue DateAuthorsTitlesSubjectsThis CollectionBy Issue DateAuthorsTitlesSubjects

        Game theory of Loss Aversion

        Thumbnail
        View/Open
        Scriptie Maarten de Jong Loss aversion.pdf (568.3Kb)
        Publication date
        2018
        Author
        Jong, M.T. de
        Metadata
        Show full item record
        Summary
        My bachelor thesis is about Loss aversion. In decision theory there are a lot of theories which claim to be a descriptive model of decision making under risk. However, making choices under risk is inconsistent with the basic tenets of utility theory. Nevertheless, expected utility still dominates game-theoretic situations. Kahneman and Tversky’s prospect theory is an alternative theory to expected utility in which outcomes are evaluated with respect to a reference point. With this new investigation about reference-dependent utility functions, a new kind of result is born, Loss aversion. Loss aversion is widely investigated and it refers to people’s tendency to prefer avoiding losses much more than they are motivated to get the equivalent gain. I will extend games to include loss aversion characteristics of the players. In these games, I will show that besides the Nash equilibria, there exists also a loss-aversion equilibrium for any extended game. Besides this, I will also investigate how an increase in loss aversion of a player can effect the payoffs.
        URI
        https://studenttheses.uu.nl/handle/20.500.12932/28681
        Collections
        • Theses
        Utrecht university logo