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Risk Management: Understanding Loss Aversion and Decision Making, Study notes of Credit and Risk Management

A set of notes from a university course on risk management, specifically focusing on the concept of loss aversion and its impact on decision making. The notes include references to daniel kahneman's book 'thinking, fast and slow' and various images of happy faces. The document also includes a table showing the difference between decision weights and actual probabilities, as well as a discussion on the fourfold pattern of gains and losses, and the certainty and possibility effects.

Typology: Study notes

2011/2012

Uploaded on 03/09/2012

mejiaritch
mejiaritch 🇺🇸

18 documents

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Download Risk Management: Understanding Loss Aversion and Decision Making and more Study notes Credit and Risk Management in PDF only on Docsity! 1/18/12   1   Risk Management: Consideration of Loss Aversion FIN 3360 Instructor: David Murray CSUEB Winter 2012 Lucé Economica, llc 2012 What  do  you  no/ce?   Source:    Kahneman.  2011.  Thinking,  Fast  and  Slow.    Ch.  28-­‐31   Google  Images:   h3p://us.123rf.com/400wm/400/400/kentoh/kentoh0911/kentoh091100023/5810969-­‐shiny-­‐happy-­‐people-­‐smiling-­‐faces-­‐in-­‐3d.jpg;     also  h3p://www.wordans.us/wordansfiles/images/2009/4/17/16896/16896_340.jpg?1258088400   1/18/12   2   Does  the  one  happy  face  in  the  picture   make  you  feel  a  lot  cheerier?   Source:    Kahneman.  2011.  Thinking,  Fast  and  Slow.    Ch.  28-­‐31   Google  images:  hCp://2.bp.blogspot.com/_7YR-­‐Rsp2dxo/TOisuERfXmI/AAAAAAAAACI/mpu3s5m-­‐qYc/s1600/ happy_faces_lead_wideweb__470x339%2525252525252525252C0.jpg   Goals  can  be  reference  points   Kahneman:   “  Loss  aversion  refers  to  the  rela/ve  strength  of  two   mo/ves:  we  are  driven  more  strongly  to  avoid   losses  than  to  achieve  gains.  “   “  A  reference  point  is  some/mes  the  status  quo,  but   it  can  also  be  a  goal  in  the  future:  not  achieving   a  a  goal  is  a  loss,  exceeding  the  goal  is  a  gain.  “   Source:    Kahneman.  2011.  Thinking,  Fast  and  Slow.    Ch.  28-­‐31.  p.  303  
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