Systems and Methods for Providing Customized Financial Advice Using Loss Aversion Assessments to Determine Expected Utility Values of Investment Portfolio Allocations

A personalized investment portfolio recommendation system, comprising:

• a loss aversion determination system, comprising:
• a plurality of first data storage devices maintaining a gamble table, the gamble table including N gamble pairs, where N is greater than or equal to two, each gamble pair including a loss aversion gamble, a gain seeking gamble, and a corresponding loss aversion coefficient;
• a loss aversion computing device in communication with the first plurality of data storage devices, the loss aversion computing device operative to, for each gamble pair from i=1 to N:
• transmit, in response to a user request, an ith gamble pair for display by a user computing device, the ith gambling pair including an ith loss aversion gamble and a ith gain seeking gamble;
• receive, in response to transmitting the ith gambling pair, a selection of either the ith loss aversion gamble or the ith gain seeking gamble;
• identify, from the received selections, transitions between the received selections representing a change of user attitude between loss aversion and gain seeking;
• and
• calculate a personalized loss aversion score (LAS) for the user based upon the loss aversion coefficients corresponding to the identified transitions;
• and
• an investment portfolio expected utility determination system comprising:
• a plurality of a plurality of second data storage devices maintaining:
• information regarding a plurality of possible investment portfolio outcomes, πi;
• a probability corresponding to each outcome, pi;
• and a utility corresponding to each outcome, u(πi);
• an expected utility computing device in communication with the plurality of second data storage devices, the expected utility computing device operable to:
• determine a utility outcome according to:
• a bi-linear utility function:
• πi≧$0,u(πi)=πi
• πi≦$0,u(πi)=πi*LAS
• and to determine an expected utility value (EU) for the investment portfolio according to:
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A non-transitory computer readable medium with computer executable instructions stored thereon executed by a digital processor to perform the method of determining an expected utility value of an investment portfolio (EU) for a user, comprising:

• instructions for generating a gamble table comprising a plurality of gamble pairs;
• each of said plurality of gamble pairs including a loss aversion gamble and a gain seeking gamble;
• instructions for determining a loss aversion coefficient for each of said plurality of gamble pairs;
• instructions for displaying each of said plurality of gamble pairs in a random order;
• instructions for receiving, for each of said plurality of gamble pairs, a user selection;
• each user selection including one of the loss aversion gamble and the gain seeking gamble;
• instructions for identifying at least one transition among the user selections based on the loss aversion coefficients;
• instructions for determining the loss aversion score based on the loss aversion coefficient associated with said at least one transition;
• and
• instructions for displaying a message based on said loss aversion score;
• instructions for determining an expected utility value for at least two investment portfolios based on the user's loss aversion score, and information relating to each portfolio's portfolio outcome, a probability corresponding to each outcome and a utility corresponding to each outcome;
• instructions for comparing the expected utility values for the investment portfolios and recommending to the user the investment portfolio with the highest expected utility value.