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Aspect of decision and prospect theories
behavioral economics, loss aversion is a cognitive bias in which the same situation is perceived as worse if it is framed as a loss, rather than a gain
Loss_aversion
Theory of behavioral economics
describes how individuals assess their loss and gain perspectives in an asymmetric manner (see loss aversion). For example, for some individuals, the
Prospect_theory
Topics referred to by the same term
Inequity aversion Loss aversion Risk aversion Sexual aversion Taste aversion (disambiguation) Work aversion Aversion may also refer to: Aversion therapy
Aversion
Concept in behavioral economics
phenomena such as the status-quo bias and the endowment effect than loss aversion. The psychological inertia account asserts that the reason individuals
Psychological_inertia
Cognitive bias
can be defined as "an application of prospect theory positing that loss aversion associated with ownership explains observed exchange asymmetries." This
Endowment_effect
Attempt made by investors to avoid negative financial information
gains. Panidi (2015) looked at the link between loss aversion and the ostrich effect – loss aversion was measured through lottery choices, and the ostrich
Ostrich_effect
2011 book by Daniel Kahneman
they complement each other, starting with Kahneman's own research on loss aversion. From framing choices to people's tendency to replace a difficult question
Thinking,_Fast_and_Slow
Economics concept
support theory; loss aversion and mental accounting. Loss aversion refers to the assumption that investors are more sensitive to losses than gains, and
Equity_premium_puzzle
American economist and Nobel Laureate (born 1945)
with Benartzi, demonstrated how myopic loss aversion, wherein investor behavior is guided by their aversion to loss over a shorter time horizon, contributes
Richard_Thaler
Economics theory
In economics and finance, risk aversion is the tendency of people to prefer outcomes with low uncertainty to those outcomes with high uncertainty, even
Risk_aversion
Interdisciplinary field
of human decision-making is a strong aversion to potential loss. Under loss aversion, the perceived cost of loss is experienced more intensely than an
Neuroeconomics
Cognitive bias
intersects with other non-rational cognitive processes such as loss aversion, in which losses comparative to gains are weighed to a greater extent. Further
Status_quo_bias
American marketing professor
best known for his critique of the behavioral economics concept of loss aversion. Gal received his Ph.D. from Stanford University in 2007. He joined
David_Gal
Tendency to accept the default option
some dimensions are interpreted as losses and therefore becomes more important for the choice. This loss aversion explanation of the default effect can
Default_effect
Factors influencing economic decisions
concepts later popularized by modern Behavioral Economic theory, such as loss aversion. Jeremy Bentham, a Utilitarian philosopher in the 1700s conceptualized
Behavioral_economics
Idea of performance-based pay
(around $3). Kahneman attributed this result to loss aversion: owners were affected more by the loss of the mug compared to the effect of a buyer purchasing
Merit_pay
studies have found bias in non-human animals as well. For example, loss aversion has been shown in monkeys and hyperbolic discounting has been observed
List_of_cognitive_biases
Use of rewards as motivation
than being given a reward of equivalent value. This is known as loss aversion. A weight loss programme asked some participants to deposit money that would
Incentivisation
Negative emotional reaction to personal past acts
researched loss aversion and how it might affect making decisions. The study suggests that depending on the circumstances and experiences loss aversion could
Regret
Approach to portfolio selection under loss aversion
Chance-constrained portfolio selection is an approach to portfolio selection under loss aversion. The formulation assumes that: (i) investor's preferences are representable
Chance-constrained portfolio selection
Chance-constrained_portfolio_selection
Tendency to give more importance to negative experiences than positive ones
to find loss aversion in decision making. They wrote, "in particular, strict gain and loss of money does not reliably demonstrate loss aversion". This
Negativity_bias
Israeli-American psychologist and economist (1934–2024)
Cognitive bias Conjunction fallacy Dictator game Framing (social sciences) Loss aversion Optimism bias Peak–end rule Planning fallacy Prospect theory Cumulative
Daniel_Kahneman
that similar to decisions under uncertainty, loss aversion applies to goals. With goals, loss aversion implies that the negative affect evoked from performing
Goal_pursuit
Consumer behaviour model
tuition). Mental accounting can result in people demonstrating greater loss aversion for certain mental accounts, resulting in cognitive bias that incentivizes
Mental_accounting
To like one thing more than another
the utility function. Economic biases such as reference points and loss aversion also violate the assumption of rational preferences by causing individuals
Preference
Concept in psychology
probabilities enhance the value of long-shots and amplify aversion to a small chance of a severe loss. Consequently, people are often risk seeking in dealing
Risk_aversion_(psychology)
relative to an existing reference point, or status quo. It is related to loss aversion and the endowment effect. In prospect theory it is appropriate to use
Reference_dependence
Study of cognition leading to behaviour
and ultimately reduce disease burden through interventions such as loss aversion, framing, defaults, nudges, and more. Other applied disciplines of behavioural
Behavioural_sciences
Reduction of the total body mass
medicine, health, or physical fitness, weight loss is a reduction of the total body mass, by a mean loss of fluid, body fat (adipose tissue), or lean mass
Weight_loss
Systematic pattern of deviation from norm or rationality in judgment
Knetsch, J. L. and Thaler, R. H. (1991) Anomalies The Endowment Effect, Loss Aversion, and Status Quo Bias, Journal of Economic Perspectives. Dean, M. (2008)
Cognitive_bias
Cognitive bias in economics
almost rational equivalents. This result is consistent with the 'Myopic Loss Aversion theory'. Furthermore, the money illusion means nominal changes in price
Money_illusion
Evaluation of circumstances to make a decision
evaluate outcomes relative to a reference point, predicting loss aversion (valuing losses twice as much as equivalent gains). This has applications in
Judgement
American author, and speaker (born 1978)
(as Gonzales might put it), and using a margin of safety to overcome loss aversion." Frauenheim, Ed (September 12, 2013). "The Power of Positive Tinkering"
Shawn_Achor
Economic theory
of what behaviorists cite as counterexamples to economic rationality—loss aversion, overconfidence, overreaction, and other behavioral biases—are consistent
Adaptive_market_hypothesis
Israeli psychologist (1937–1996)
conjunction fallacy framing behavioral finance clustering illusion loss aversion prospect theory cumulative prospect theory representativeness heuristic
Amos_Tversky
Israeli-American economist (born 1953)
Key concepts related to behavioural economics, such as risk aversion and loss aversion, were also studied through evolutionary lenses. Galor and Savitsky
Oded_Galor
Machine learning technique
pairwise comparisons, KTO is designed to be data-efficient and to reflect "loss aversion" more directly by using a straightforward notion of "good vs. bad" at
Reinforcement learning from human feedback
Reinforcement_learning_from_human_feedback
American behavioral economist
decision-making of individual investors, such as his work on myopic loss aversion and naïve diversification. Benartzi's current focus is online behavior
Shlomo_Benartzi
Cognitive bias
Constance Stillinger (1988). Reactive devaluation could be caused by loss aversion or attitude polarization, or naïve realism. In an initial experiment
Reactive_devaluation
Tendency to favor inaction over action
of the loss and foregone benefits from commissions. Loss aversion. The comparison between omission and commission interacts with loss aversion, the principle
Omission_bias
Feeling of worry about lost opportunities
Keeping up with the Joneses – Idiom on comparing oneself to neighbors Loss aversion – Aspect of decision and prospect theories Midlife crisis – Transition
Fear_of_missing_out
Tendency to place higher value on an object one owns
show the endowment effect that cannot be parsimoniously explained by loss aversion. Two routes have been proposed to explain the mere ownership effect
Mere_ownership_effect
Form of psychological treatment
Aversion therapy is a behavioral treatment that aims to reduce unwanted behavior by pairing it with an unpleasant or uncomfortable experience. For example
Aversion_therapy
Medical condition
DSM-III-R. Other terms used to describe the phenomenon include sexual aversion and sexual apathy. More informal or colloquial terms are frigidity and
Hypoactive sexual desire disorder
Hypoactive_sexual_desire_disorder
Policy of interest rates or money supply
quo. One result of loss aversion is that when gains and losses are symmetric or nearly so, risk aversion may set in. Loss aversion can be found in multiple
Monetary_policy
Productivity application
distraction through gamification rather than forced restriction, applying loss aversion as its core mechanism: a virtual tree dies if the user leaves the app
Forest_(application)
Spending money to access savings
habits. Consumers engage in spaving due to fear of missing out and loss aversion. Consumers who excessively engage in spaving are referred to as spavers
Spaving
Behavioral model of risky decision-making
point) and losses (i.e. outcomes below the reference point) and care generally more about potential losses than potential gains (loss aversion). Finally
Cumulative_prospect_theory
State of low mood and aversion to activity
Depression is a mental state of low mood and aversion to activity. It affects about 3.5% of the global population, or about 280 million people worldwide
Depression_(mood)
Concept in behavioral economics, political theory and behavioral sciences
negative framing can both nudge behavior, depending on context and goal. Loss aversion A phenomenon when people dislike losing to a greater extent than the
Nudge_theory
Psychological heuristic
Popescu examines the effect of low peak price and its interaction with loss aversion in optimal pricing strategies. They discovered that steep discounts
Peak–end_rule
Probability puzzle
Knetsch, J. L.; Thaler, R. H. (1991). "Anomalies: The endowment effect, loss aversion, and status quo bias". Journal of Economic Perspectives. 5: 193–206
Monty_Hall_problem
American social media and messaging app
built on scientifically documented cognitive vulnerabilities related to loss aversion. At the start of December 2025, Russia's internet and media regulator
Snapchat
Minimum price a seller is willing to accept for one unit of their product
in loss aversion as people attach value to owned objects, resulting in a higher WTA of a good or service than WTP. The greater the degree of loss aversion
Willingness_to_accept
Cognitive bias
the disposition effect consist of four elements: • loss aversion and aversion to accepting a sure loss as expressed by the value function and associated
Disposition_effect
2017 studio album by Carbon Based Lifeforms
"780 Days" 6:16 8. "~42°" 4:55 9. "Rayleigh Scatterers" 5:12 10. "Dodecahedron" 8:43 11. "Loss Aversion" 5:12 12. "Everwave" 14:21 Total length: 82:18
Derelicts_(album)
Application of economics in a business
However, often consumers fail to switch to the optimal choice because of loss aversion, information deficiencies, procrastination, status-quo bias or endowment
Managerial_economics
Predicting someone's future emotions (affect)
incorporates loss aversion, or the tendency to react more strongly to losses rather than gains. Some researchers suggest that loss aversion is in itself
Affective_forecasting
Mathematical framework for investment risk
returns. The psychological phenomenon of loss aversion is the idea that investors are more concerned about losses than gains, meaning that our intuitive
Modern_portfolio_theory
Risk management technique in investing
maximum Sharpe ratio. Roy’s work is the foundation of asset pricing under loss aversion. His work was followed by Lester G. Telser’s proposal of maximizing
Roy's_safety-first_criterion
Coming to work at an office for a short period and leaving to work elsewhere
Knetsch, Jack; Thaler, Richard (1991). "Anomalies: The endowment effect, loss aversion, and status quo bias". The Journal of Economic Perspectives. 5 (1):
Coffee_badging
American economist
Michael and List, John A. “Do Professional Traders Exhibit Myopic Loss Aversion? An Experimental Analysis,” Journal of Finance, (2005), 60 (1): 523–534
John_A._List
people were subject to cognitive biases such as the framing effect, loss aversion, the gambler's fallacy, confirmation bias, and many others. Further
List of unsolved problems in economics
List_of_unsolved_problems_in_economics
American economist
extensive research on loss aversion, commitment devices, and behavioral interventions. Her work "Do People Anticipate Loss Aversion?" with Alex Imas and
Sally_Sadoff
Growing one's existing wealth without creating new wealth
ISBN 0-89096-090-9. Connes, Richard; Hartley, Roger (September 2003). "Loss Aversion and the Tullock Paradox". Discussion Papers in Economics. No. 3/17.
Rent-seeking
Physical aspects of culture
Thaler, Richard H. (1991-01-01). "Anomalies: The Endowment Effect, Loss Aversion, and Status Quo Bias". The Journal of Economic Perspectives. 5 (1):
Material_culture
American internet company
on their experiences and two principles from behavioral economics, loss aversion and time inconsistency. They recruited Jordan Goldberg, then a student
StickK
Mathematical optimization approach
Chance-constrained portfolio selection is an approach to portfolio selection under loss aversion which is based on CCP. The goal is to maximize expected returns while
Chance constrained programming
Chance_constrained_programming
Video game business model
players to continue playing and buying microtransactions is called loss aversion. When a player continues to lose over and over again, they begin to
Microtransaction
action would still be greater than the loss experienced. Note that, due to risk aversion, the values of cost and loss measured above need not be the same
Cost-loss_model
Cognitive bias
process in that stage. Allais paradox Certainty effect Loaded question Loss aversion Tversky, A.; Kahneman, D. (1981-01-30). "The framing of decisions and
Pseudocertainty_effect
University of British Columbia Behavioral economics, Prospect theory, loss aversion, cognitive biases Vernon L. Smith (1927–) United States "for having
List of Nobel Memorial Prize laureates in Economic Sciences
List_of_Nobel_Memorial_Prize_laureates_in_Economic_Sciences
Violent resistance against government
injustice". Loss aversion holds that "people tend to evaluate their satisfaction relative to a reference point, and that they are 'loss adverse". Individuals
Rebellion
Effect of how information is presented on perception
derived from loss aversion. Politicians want to make their idea less of a risk to potential voters since "People pay more attention to losses than to gains
Framing_(social_sciences)
American economist
wishes of their future selves, and loss aversion: individuals' often strong negative emotional response to even small losses. StickK was founded in 2008 with
Dean_Karlan
Decision-making concept
defaults as policymaker recommendations, cognitive biases related to loss aversion like the status quo bias or endowment effect might be at work, or consumers
Choice_architecture
Health and wellness company
prize. The model provides a double incentivization in the form of loss aversion and the opportunity to gain. Step Challenges HealthyWage Step Challenges
HealthyWage
Application of behavioral economics to legal systems
rationality in predictable ways. These deviations—such as framing effects, loss aversion, and overoptimism—have important implications for legal policy, regulation
Behavioral_law_and_economics
Behaviorial tendency
Nighswander. Retrieved 2019-05-14. Nguyen Q (June 2016). "Linking loss aversion and present bias with overspending behavior of tourists: Insights from
Present_bias
Political professor and researcher
Frenemies: Alliance Politics and Nuclear Nonproliferation in US Foreign Policy (2019) Notable ideas resource extraction, loss aversion, and balance-of-risk
Jeffrey_W._Taliaferro
2014 video game
Nick Tan of GameRevolution described the game as a "case study for loss aversion", noting frustration among Sims fans due to the missing features and
The_Sims_4
Human behavior pattern in which the participant takes on increasing risk
descriptions with no spaces Pivoting – Early business development tool Loss aversion – Aspect of decision and prospect theories Martingale (betting system) –
Escalation_of_commitment
Economic theory that asset prices fully reflect all available information
not eliminate potential mispricings from the severe risk-intolerance (loss aversion) of individuals underscored by behavioral finance. Economists, behavioral
Efficient-market_hypothesis
Model of humans as rational, self-interested agents
9 June 2016. Benartzi, Shlomo; Thaler, Richard H. (1995). "Myopic Loss Aversion and the Equity Premium Puzzle" (PDF). The Quarterly Journal of Economics
Homo_economicus
Psychology of human consumption of meat
disengagement as a motivated reasoning process which is triggered by loss aversion and dissonance avoidance. Moral perspectives can have a strong influence
Psychology_of_eating_meat
Purchasable video game item containing random rewards
noted that these design strategies can exploit cognitive biases such as loss aversion, sunk‑cost fallacy, and reward anticipation, making it difficult for
Loot_box
Proposed medical diagnosis related to overuse of social media
Knetsch JL, Thaler RH (February 1991). "Anomalies: The Endowment Effect, Loss Aversion, and Status Quo Bias". Journal of Economic Perspectives. 5 (1): 193–206
Problematic_social_media_use
Ability to influence another side in negotiations
side worse off. The power of negative leverage relies on loss aversion. Because potential losses are seen as worse than equivalent gains, negative leverage
Leverage_(negotiation)
Integer ending in zeroes
(link) L. Ross, Stephen; Zhou, Tingyu (3 November 2020). "Documenting Loss Aversion using Evidence of Round Number Bias" (PDF). University of Connecticut:
Round_number
Form of gambling
attitude with linear utility curves and have no preferences implying loss aversion or the like). However, if someone offered odds of 10 to 1 that a card
Fixed-odds_betting
Tax paid after inheritance of property
work or land value tax. Arguments against inheritance taxes include loss aversion to kinship. Differences in inheritance taxes on trusts and estates of
Inheritance_tax
American behavioral scientist
of Personality and Social Psychology, 81, 684–696. Theories of Humor Loss Aversion Mental Accounting Colorado University profile page Retrieved April 20
Peter_McGraw
Risk arising from changes in market volatility affecting the value of financial positions
Option Implied Volatility and Its Structural Changes With Links to Loss Aversion". In Knight, John L.; Satchell, Stephen (eds.). Forecasting Volatility
Volatility_risk
Branch of statistics
Chance-constrained portfolio selection – Approach to portfolio selection under loss aversion Failure rate – Frequency with which an engineered system or component
Survival_analysis
Form of government regulation on professions or vocations for compensation
legislation Labor economics Labour market flexibility Law and economics Loss aversion Professional certification Professional regulation Regulatory capture
Occupational_licensing
2010 book by Sam Harris
in general, including human cognitive limitations and biases (e.g., loss aversion can sway human decisions on important issues like medicine). He mentions
The_Moral_Landscape
Theory of economic choice
they already own based upon that ownership, similar to the concept of loss aversion. A view from Query Theory, however, argues that this difference is not
Query_theory
Set of constraints conceptualised as a border
Knetsch, J., & Thaler, R. (1991). Anomalies: The Endowment Effect, Loss Aversion, and Status Quo Bias. Journal Of Economic Perspectives, 5(1), 193–206
Margin_(economics)
Tendency of people to prefer the letters in their name over other letters in the alphabet
Knetsch, J. L.; Thaler, R. H. (1991). "Anomalies: The endowment effect, loss aversion, and status quo bias". Journal of Economic Perspectives. 5 (1): 193–206
Name-letter_effect
inequality)". The index reduces the HDI by the Atkinson index with inequality aversion parameter ϵ of 1 according to the inequality of the distribution of health
List of countries by inequality-adjusted Human Development Index
List_of_countries_by_inequality-adjusted_Human_Development_Index
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