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Loss aversion, social comparison and physical abilities at younge age

Nakamoto, Yasuhiro and Sato, Masayuki (2011): Loss aversion, social comparison and physical abilities at younge age.

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Abstract

We examine how physical abilities affect individuals' preferences. In particular, by incorporating social comparison into prospect theory, we directly estimate the degree of loss aversion from social comparison, a concept we term `ALJ' (\textit{Avoiding Loss relative to the Joneses}). Our main findings are as follows: (i) the participants who choose the physical education as the best subject exhibit a greater degree of ALJ than others; (ii) physical fitness influences the degree of ALJ; (iii) gender influences social comparison preferences; (iv) participants with a greater degree of ALJ do not respond to voluntary questionnaire; (v) the form of participants' ALJ is affected by the voluntary behavior of their parents. A comparison of ALJ with loss aversion in the original prospect theory reveals that they have different characteristics.

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