Dissertation
Money and relationships: differences in risk preferences in the social and financial domains
University of Iowa
Doctor of Philosophy (PhD), University of Iowa
Summer 2022
DOI: 10.25820/etd.006731
Abstract
For decades, the central tenet of prospect theory has been the idea of loss aversion: the notion that people find losses so unpleasant they will take greater risks to avoid loss than to pursue gains. Although much of the evidence about loss aversion comes from studies conducted in the financial domain, there is much to learn about how people react to risk in other domains, particularly in a social context. How do people respond to risk in social decisions? The current work explores how people make decisions related to social relationships. This paper extends the understanding of prospect theory to the social domain by testing different risk preference mechanisms.
Details
- Title: Subtitle
- Money and relationships: differences in risk preferences in the social and financial domains
- Creators
- Sunme Lee
- Contributors
- Dhananjay Nayakankuppam (Advisor)Cathy Cole (Advisor)Gary Gaeth (Committee Member)Chelsea Galoni (Committee Member)Paul Windschitl (Committee Member)
- Resource Type
- Dissertation
- Degree Awarded
- Doctor of Philosophy (PhD), University of Iowa
- Degree in
- Business Administration
- Date degree season
- Summer 2022
- DOI
- 10.25820/etd.006731
- Publisher
- University of Iowa
- Number of pages
- x, 71 pages
- Copyright
- Copyright 2022 Sunme Lee
- Language
- English
- Description illustrations
- Illustrations, charts, graphs, tables
- Description bibliographic
- Includes bibliographical references (pages 52-59).
- Public Abstract (ETD)
Why do people work hard to make a good impression on others? This question illustrates situations in which individuals are faced with decisions related to social relationships. As a key feature of prospect theory, loss aversion describes that people are more risk-seeking in losses than gains because the emotional pain of losses has a larger impact than the emotional pleasure of gains for the same value quantity (Kahneman and Tversky 1979). However, this has been studied mainly in the financial domain, and there is still much to learn about risk-taking in non-financial domains, such as the social domain.
This paper found that, in contrast to the financial domain, people are more risk-averse in losses and more risk-seeking in gains in the social domain. I posit that the reason is because people have two extreme reference points for each frame in the social domain, while people have a status quo as a reference point in the financial domain.
- Academic Unit
- Tippie College of Business
- Record Identifier
- 9984285247902771
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