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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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We examine the relationship between competitive behavior and social comparison where in this paper competitive behavior is measured by physical ability performance. In particular, by incorporating social comparison into prospect theory, we directly estimate the degree of loss aversion with social comparison, a concept we term `ALJ' (Avoiding Loss relative to the Joneses). Our main findings are as follows: (i) the estimated value function is refracted at another's gain and the average estimated value of ALJ is significantly different from the unity; (ii) physical fitness influences the degree of ALJ; (iii) gender influences social comparison preferences as well as ALJ; (iv) participants with a greater degree of ALJ tend not to respond to voluntary questionnaire; (v) the form of participants' ALJ is affected by the voluntary behavior of their parents. In addition, we compare ALJ with loss aversion in the framework of prospect theory, and find evidences which imply that ALJ and loss aversion have different characteristics.

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