Tag: Loss aversion

Empirical Estimates of Loss Aversion

Jason Shafrin

Kahneman and Tversky’s Prospect Theory posit that individuals have loss aversion. What is loss aversion? It means that individuals experience losses more intensely than gains of the same magnitude; for instance, the psychological impact of losing a certain amount of money is greater than the pleasure derived from gaining that same amount. A key question…

Loss Aversion and Autism

Jason Shafrin1 Comment

If you have $50, would you rather lose $30 or keep $20.  After a little bit of thought, you probably realize that these are the same thing.  Experimental economists, however, have generally found that individuals will go to great lengths to avoid the $30 loss.   This phenomenon is named  loss aversion.   In prospect theory, loss…