Economists and psychologists have documented several patterns of behaviour (e.g., "loss aversion", "loss avoidance") whereby losses and gains are treated differently. These patterns have been frequently observed in individual decision problems, but evidence of similar effects in strategic decision making has thus far been scarce. We report the results of a human-subjects experiment showing the strongest evidence we know of that this phenomenon exists in strategic behaviour as well. Subjects in the experiment play two versions of a repeated hawk-dove game that are identical up to the level of payoffs; in one version, all payoffs are positive, while in the other, payoffs are negative iff both players choose the hawk strategy. Under a one-population random-matching protocol, we find substantial, and significant, differences in behaviour between the two games, in the predicted direction. More striking, we find a similar result under fixed-pairs matching.
Feltovich, Nick (2011), "The effect of subtracting a constant from all payoffs in a hawk-dove game: experimental evidence of loss aversion in strategic behavior", Southern Economic Journal 77 (4), pp. 814-826.
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