Loss Aversion - Dr. Franziska Frank

Risk Assessment

On a scale of 1-10 (1 = very low, 10 = very high) please assess yourself:

General Risk
I tend to be cautious = low; I dare to do something even if everything is against me = high

5

Risk of Accident
(I wear a bicycle helmet = low; I ride off-piste, heliskiing = high)

5

Health Risk
(I often go for preventive care = low; I fly to India even during times of high infections = high)

5

Financial Risk
(I have a lot of insurance products = low; I buy many shares = high)

5

Social Risk
(I only go to parties if I know someone there = low; I give speeches at Christmas parties = high)

Average Risk Score: 5.0

Decision Scenario 1

A new strain of flu is expected to kill 600 people. Two programs to combat the disease have been proposed. Please choose between Program A or B.

Program A: If program A is adopted, 400 people will die.

Program B: If program B is adopted, there is a one-third probability that nobody will die and a two-thirds probability that 600 people will die.

Decision Scenario 1

A new strain of flu is expected to kill 600 people. Two programs to combat the disease have been proposed. Please choose between Program A or B.

Program A: If program A is adopted, 200 people will be saved.

Program B: If program B is adopted, there is a one-third probability that 600 people will be saved and a two-thirds probability that no people will be saved.

Decision Scenario 2

Last year, your part of the company made a large profit of € 2 million. You now have the option of investing in two different projects. Which one would you choose?

Project Zeta: If the economy goes well (50% probability) result: plus € 500,000; if the economy goes badly (50% probability) result: plus € 100,000.

Project Omega: If the economy is good (50% probability) result: plus € 1,000,000 - if the economy is bad (50% probability) result: minus € 400,000

Risk Assessment

Decision Scenario 1

Decision Scenario 1

Decision Scenario 2

Loss Aversion Results