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Student Performance and Loss Aversion

Author

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  • Karle, Heiko

    (Frankfurt School of Finance & Management)

  • Engelmann, Dirk

    (HU Berlin)

  • Peitz, Martin

    (University of Mannheim)

Abstract

In this paper, we match data on student performance in a multiple-choice exam with data on student risk preferences that are extracted from a classroom experiment. We find that more-loss-averse students leave more questions unanswered and perform worse in the multiple-choice exam when giving an incorrect answer is penalized compared to not answering. We provide evidence that loss aversion parameters extracted from lottery choices in a controlled experiment have predictive power in a field environment of decision making under uncertainty. Furthermore, the degree of loss aversion appears to be persistent over time, as the experiment was conducted three months prior to the exam. We also find important differences across genders; they are partly explained by differences in loss aversion.

Suggested Citation

  • Karle, Heiko & Engelmann, Dirk & Peitz, Martin, 2019. "Student Performance and Loss Aversion," Rationality and Competition Discussion Paper Series 182, CRC TRR 190 Rationality and Competition.
  • Handle: RePEc:rco:dpaper:182
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    Cited by:

    1. Marcela Ibanez & Sebastian O. Schneider, 2023. "Income Risk, Precautionary Saving, and Loss Aversion – An Empirical Test," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2023_06, Max Planck Institute for Research on Collective Goods.
    2. Montolio, Daniel & Taberner, Pere A., 2021. "Gender differences under test pressure and their impact on academic performance: A quasi-experimental design," Journal of Economic Behavior & Organization, Elsevier, vol. 191(C), pages 1065-1090.
    3. Marcela Ibanez & Sebastian O. Schneider, 2021. "Income Risk, Precautionary Saving, and Loss Aversion – An Empirical Test," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2021_06, Max Planck Institute for Research on Collective Goods.

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    More about this item

    Keywords

    loss aversion; decision making under uncertainty; multiple choice;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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