Carnegie Mellon's Alex Imas Wins CESifo Young Economist Award-CMU News - Carnegie Mellon University

Monday, November 3, 2014

Carnegie Mellon's Alex Imas Wins CESifo Young Economist Award

By Shilo Rea / 412-268-6094                       

Alex ImasPITTSBURGH—Carnegie Mellon University's Alex Imas has won the Distinguished CESifo Affiliate Award given annually to a young economist for displaying scientific originality, policy relevance and quality in behavioral economics. CESifo is a research organization in Europe that combines theoretically oriented economic research with leading empirical work from around the world.

Imas, assistant professor of social and decision sciences in the Dietrich College of Humanities and Social Sciences, won for his paper "The Realization Effect: Risk-Taking After Realized Versus Paper Losses," in which he explored how prior losses influence a person's subsequent risk attitudes. Determining how prior outcomes affect preferences for risk is critical for understanding how people make choices when faced with uncertainty. Previous research findings were inconsistent, even contradictory: some found that people took on more risk after a loss while others found the opposite — that they took on less risk.

In his award-winning paper, Imas shows that the seemingly inconsistent findings can be explained by individuals' different responses to realized versus "paper" losses, or unrealized capital losses. Following a realized loss, people are more likely to avoid risk. If the loss has not been realized, a paper loss, individuals are more likely to chase their losses and take on even greater risk. The findings have important implications for contract design and monitoring.

"Imas's research brilliantly, and deceptively simply, makes sense of a lot of previous findings that, until he did his research, appeared contradictory. A lot of disparate findings suddenly fall into place," said George Loewenstein, the Herbert A. Simon University Professor of Economics and Psychology at CMU.

Imas, who just joined the CMU faculty after spending the 2013-14 academic year as a postdoctoral fellow in the Social and Decision Sciences Department, is interested in behavioral and experimental economics, particularly how social concerns and emotions influence decision making and preferences. As the 2014 Distinguished CESifo Affiliate Award recipient, Imas receives a cash prize and membership into the CESifo organization as an affiliate for life.

For more information, visit http://www.cmu.edu/dietrich/sds/people/faculty/alex-imas.html.

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Alex Imas (pictured above), an assistant professor of social and decision sciences, won for his paper "The Realization Effect: Risk-Taking After Realized Versus Paper Losses," in which he explored how prior losses influence a person's subsequent risk attitudes.