TRANSFERENCE OF LOSS

The Bias in Brief

Where losses arising out of agents’ actions can be transferred to their principal, or to a third party, (e.g. the joint stock company, the government, the public sector company or even a scapegoat), personal gains to agents loom larger than the potential losses to their principals.

The Bias in Action

This can flip agents to be risk-seeking even in the gain domain.

Cognitt