Unearthing the Genesis of Foreign Aid in Economic
This paper studies experimentally how authority and conformity biases influence individuals’ degree of loss aversion. Participants’ risk-preferences are measured by Hoult-Laury lottery allocation and risk self-evaluation tasks. The experimental design includes three conditions: two treatment groups designed to elicit the biases and a control condition. The research avoids direct deception on purpose to bypass the usage of ambiguous methodology which caused multiple ethical issues in previous studies. A significant positive relationship is found between the authority bias and individuals’ degree of loss-aversion when measured by Hoult-Laury switching point. It provides evidence that risk-preferences of individuals can be altered by an authority opinion. The conformity bias impact on participants, however, was not proven to statistically significant. In addition, both of the biases do not significantly influence subjects choices when loss-aversion is measured by self-evaluation.
Faculteit der Managementwetenschappen