Author Topic: Loss Aversion Calculator  (Read 540 times)

AdrianC

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Loss Aversion Calculator
« on: January 14, 2019, 09:58:51 AM »
Saw this on another board and thought it was interesting:

"The Loss Aversion Calculator: assesses the degree of risk you can cope with in your investment portfolio."
http://www.shlomobenartzi.com/behavioral-finance-tools


BicycleB

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Re: Loss Aversion Calculator
« Reply #1 on: January 14, 2019, 10:16:58 AM »
LOL, the loss aversion calculator looks like just a math test (pretty much).

"You experience gains and losses about the same... much less loss averse than most people". Am guessing most Mustachians would come out similarly. Curious whether that's true or not though!

JAYSLOL

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Re: Loss Aversion Calculator
« Reply #2 on: January 14, 2019, 10:38:43 AM »
LOL, the loss aversion calculator looks like just a math test (pretty much).

"You experience gains and losses about the same... much less loss averse than most people". Am guessing most Mustachians would come out similarly. Curious whether that's true or not though!

+1

Got the same result. 

phildonnia

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Re: Loss Aversion Calculator
« Reply #3 on: January 14, 2019, 10:43:34 AM »
So, did you pretty much just always pick the option with the better payoff, regardless of amount?

JAYSLOL

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Re: Loss Aversion Calculator
« Reply #4 on: January 14, 2019, 10:55:45 AM »
So, did you pretty much just always pick the option with the better payoff, regardless of amount?

Yes, sort of.  The amounts you could lose varied between $100 and $500 for me, and the payouts were between $100 and $2100.  Like it gave me one where my choices were either +$300/0/-$300 or +$2100/0/-$450.  Like, who would t risk the extra $150 to go for an equal chance at a $2100 payout?  Other than people that don't have $450 to lose I guess, which shouldn't really be many on this forum.  But when I had a choice of equal risk, but one amount was lower like +$100/0/-$100 vs +$300/0/-$300 I went for the lower payout option, I like risk that's weighted better in my favour than a coin toss.

AdrianC

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Re: Loss Aversion Calculator
« Reply #5 on: January 15, 2019, 05:46:13 AM »
LOL, the loss aversion calculator looks like just a math test (pretty much).

"You experience gains and losses about the same... much less loss averse than most people". Am guessing most Mustachians would come out similarly. Curious whether that's true or not though!

Yeah, it might have been interesting...

I also just played the odds. My wife got "You experience losses 2.75 times stronger than gains. This means that you are more loss averse than most people."

As she said: ďThatís why you manage this stuff and I donítĒ.

John Galt incarnate!

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Re: Loss Aversion Calculator
« Reply #6 on: January 15, 2019, 05:30:14 PM »
LOL, the loss aversion calculator looks like just a math test (pretty much).

"You experience gains and losses about the same... much less loss averse than most people". Am guessing most Mustachians would come out similarly. Curious whether that's true or not though!

Yeah, it might have been interesting...

I also just played the odds. My wife got "You experience losses 2.75 times stronger than gains. This means that you are more loss averse than most people."

As she said: ďThatís why you manage this stuff and I donítĒ.

Researchers in the field of behavioral finance discovered that the intensity of investors' unhappy feelings when the stock market declines  is 2.3X the intensity of their happy feelings when the market rises.