Sudden Death Aversion: Does It Exist and Can Something Be Done About It?

Sammanfattning: This thesis investigates a bias termed sudden death aversion, focusing on the existence of the bias and dealing with the problems it causes. Sudden death aversion is defined as the tendency to avoid options which include a higher likelihood of immediate loss, e.g. due to an excessive focus on the likelihood of immediate loss instead of focusing on the ultimate objective, even if it would be payoff superior compared to other options. Thus, sudden death aversion can cause individuals to be worse off. Sudden death aversion is investigated using a simple card game experiment with real-world financial incentives to choose the payoff superior option. Two interventions aiming to mitigate sudden death aversion are considered. It is found that individuals do exhibit sudden death aversion. It is not found that being explicit about the payoff superiority of the payoff superior option is effective at mitigating sudden death aversion. However, it is found that being explicit about the proposed bias is effective at mitigating sudden death aversion. Thus, this thesis has two main findings. Firstly, it finds that sudden death aversion is exhibited in this context. Thus, it is not simply an artefact of prior experiments lacking financial incentives to choose the payoff superior option. Secondly, it finds evidence in favour of the efficacy of an intervention to somewhat deal with the problems sudden death aversion causes.