Revise the Belief in Loss Aversion

Frontiers in Psychology

article

Sumitava Mukherjee¹ 

[1] Department of Humanities and Social Sciences, Indian Institute of Technology Delhi

关键词: loss aversion;    gains and losses;    prospect theory;    judgment;    choice;   

DOI  :  10.3389/fpsyg.2019.02723

学科分类：社会科学、人文和艺术（综合）

来源: Frontiers

【 摘 要 】

Many might be promptly answering yes to such a question, especially those trained in psychologyand applied behavioral sciences (like behavioral economics, medical decision-making, marketing,science communication, environmental action, or public policy). From the time Kahneman andTversky (1979) proposed Prospect theory as an alternative to the dominant expected utility model ineconomics, the landscape of psychology (and recently, neuro/behavioral economics) has changed.Instead of the then-common idea of expected utility that explained the valuation of outcomes,Kahneman and Tversky suggested viewing possible outcomes as prospects by combining a valuefunction and a probability function. The value function (with which we are concerned with here)was based on the loss aversion principle that states losses are weighted subjectively more than gainsfor the same objective magnitude, measured from a neutral reference point. This meant that thepsychological value (or intensity) of losing (−500$) was much more than the value of gaining(+500$). The formal representation of the value function captures both risk aversion and lossaversion. The curvature of diminishing marginal utility explains risk aversion and an asymmetricslope at the origin codes differential subjective utility of gains vs. losses.

【 授权许可】

CC BY