Out of Sight, Out of Mind: Visual Attention and Loss Aversion

The following article studies the effects of attention on risk attitudes. We present two experiments in which participants choose to accept or reject mixed gambles, that offer an equal probability of winning some amount and losing another amount. We vary the amounts of potential gains and losses on each trial and analyze the behavioral patterns in the decision making process. Our results show that higher attention to losses will lead to higher rejection rates of the gambles. This attentional effect on choices occurs both directly and through the relative weighting of Losses over Gains (i.e. Loss Aversion). The fixation on the different attributes is affected by their values (but not strongly). The levels of confidence of the participants decisions increases(decreases) with more appealing gambles when accepted(rejected). Longer reaction times correlate negatively with the levels of confidence.