Abstract:
        The Nobel Prize winning work on Prospect Theory proposed thatthe (dis)utility of losses is more than gains due to a phenomenon called ‘loss-aversion’, a result obtained in multiple later studies over theyears. The current talk focuses on prospective affective judgments that are based on predicted experiential utility. There has been confusion aboutwhat happens for lower magnitude of gains and losses. A few studies foundreversed or no loss-aversion for affective judgments of small monetary amounts but, those findings have been argued to stem from the way gainsversus losses were measured. Thus, it was not clear whether loss-aversion is magnitude dependent for affective judgments or the deviations fromProspect Theory is a measurement error. We addressed the debate concerningloss-aversion (in the prospect theoretic sense) for judgments about the intensity of gains and losses by using measurement scales that have beenargued to be suitable for measuring loss-aversion and hence rule out anyexplanations regarding measurement. In our studies that used a gambling scenario and a context of fluctuating prices, potential losses never loomedlarger than gains for low magnitudes, indicating that loss aversion ismagnitude dependent. Moreover, for the same participant, loss aversion was observable at high magnitudes but not at low magnitudes.

         Further, we foundthat loss-aversion disappears even for higher monetary values; ifcontextually an even larger anchor is provided. In our ongoing work, Ishall present some preliminary evidence of a point of inflexion (reversal) where most people switch from being gain-seeking to being loss-averse.Given the diverse range of amounts used in hundreds of behavioral economicexperiments, our findings also have a pragmatic academic importance. Theseresults imply that one of Prospect Theory’s guiding hypothesis "losses loomlarger than gains" needs to be cautioned.

About the Speaker:

           Sumitava Mukherjee has worked across the domains ofCognitive Science, Psychology and Management. Sumitava has aninterdisciplinary academic background and employs multiple researchmethods. He has done a Ph.D. from Indian Institute of Technology, Gandhinagar; M.Sc. in Cognitive Science from Centre of Behavioural andCognitive Sciences, University of Allahabad and a B.E. in ComputerEngineering from University of Pune. He is broadly interested in how humans make judgments and decisions.
        His previous work has explored the role ofcognitive processes like attention in decision making. Currently he isfocusing on the cognitive aspects of money in two related threads – (a) the psychology of gains and losses and (b) psychological consequences of money.Sumitava has received an ‘Emerging Psychologist’ award from NationalAcademy of Psychology (NAOP) in 2015. He is an associate editor for Frontiers in Psychology, Switzerland and an ad-hoc reviewer for multiplejournals. His research has been published in international journals likeJudgment and Decision Making (JDM), Proceedings of the National Academy of Sciences (PNAS), Frontiers in Psychology, Cognitive Processing and others.Sumitava is on the executive committee of the founding group for CulturalEvolution Society (USA) and National Academy of Psychology (NAOP). He is also a member of the Association for Psychological Sciences (APS), USA anda life member of the Indian Science Congress. His consulting interests are in the role of attention and affect in decisions and performance.