Business School a university for the real world


26 May 2020

The School of Economics and Finance is hosting internal seminars, the Brown Bag Seminar Series, where faculty, PhD students and external guests are invited to present their ongoing work to the School. The seminars run for 1 hour via Zoom. Staff and students are encouraged to have discussions following the presentations.


Dr Greg Kubitz - QUT School of Economics and Finance


If you can, you must.” The Evolutionary Foundation of Reference Point Choice and Loss Aversion


In the present paper we address the following questions: how and why do individuals set reference points and how do these reference points influence the individuals' satisfaction and behaviour? Our approach is to consider individuals as endowed with an innate subjective reward system shaped by evolution to motivate them to make the best decisions in terms of fitness. Rather than building a reward system precise enough to encode all the available information about options present in any given context, we show that a simpler and more flexible solution may be for evolution to allow the individuals to set themselves goals in terms of achievement. These goals act as reference points relative to which achievements are rewarded. This setting is able to explain key features about subjective utility. First, there is utility associated with setting oneself higher goals, and second, in order for the individuals to meet the goal they set themselves, their utility function is steeper below their reference point, causing the individual to be loss averse.



26 May 2020 - 26 May 2020
12:00pm - 1:00pm
Zoom link: Join from PC, Mac, Linux, iOS or Android:
Free to attend
QUT School of Economics and Finance
Nadeeka De Silva
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