Gambling with the house money in capital expenditure decisions: An experimental analysis

This paper extends the work of Thaler and Johnson (Management Science, 1990, 36, no. 6, 643-660) on prior gains and losses in a business context. In support of their results, the current experimental analysis on capital expenditure decisions finds that prior gains shift behaviour towards risk seeking. The results do not, however, offer evidence of prior losses shifting behaviour towards risk aversion.