Behavioral concept graphic

Loss aversion

Loss aversion is an element of prospect theory that explains the individual tendency to put more weight on the psychological pain of losing compared to the psychological pleasure of gaining. As such, people tend to to take on more risk to avoid losses and than to benefit from a gain.

Relevant Academic Papers
  • Ariely, D., Huber, J., & Wertenbroch, K. (2005). When do losses loom larger than gains?. Journal of Marketing Research, 42(2), 134-138.
  • Kahneman, D. (1979). Prospect theory: An analysis of decisions under risk. Econometrica, 47, 278.