FN ISI Export Format VR 1.0 PT J TI Closing a Mental Account: The Realization Effect for Gains and Losses AF Merkle, Christoph Müller-Dethard, Jan Weber, Martin AU Merkle, C Müller-Dethard, J Weber, M SO SSRN Electronic Journal SN 1556-5068 PY 2018 AB How do risk attitudes change after experiencing gains or losses? For the case of losses, Imas (2016) shows that subsequent risk-taking behavior depends on whether these losses have been realized or not. After a realized loss, individuals' risk taking decreases, whereas it increases after an unrealized (paper) loss. He refers to this asymmetry as the realization effect. We replicate this result (N=203) and in addition find a realization effect for the gain domain. Independent of a prior gain or loss, risk taking is higher when outcomes remain unrealized. In several further experiments (N=775), we test theoretical predictions about risk taking and skewness for paper and realized outcomes as well as examine the robustness of the effect with respect to the realization mechanism. In line with the predictions, we find no realization effect for non-positively skewed lotteries and show that the effect is only reliably observed if money is physically transferred. DI 10.2139/ssrn.3189076 ER