Loss Aversion in Riskless Choice¶
Tversky, A., & Kahneman, D. (1991). Loss Aversion in Riskless Choice: A Reference-Dependent Model. Quarterly Journal of Economics, 106(4), 1039-1061.
Cited by¶
3 citations across 3 artifacts.
Each citation links to the sentence it supports in the citing article.
Primes¶
- Loss Aversion
- This reference-dependence property extends to riskless choice (Tversky-Kahneman 1991)
This sourceFormalizes reference-dependent preferences and the loss-aversion mechanism that underlies the asymmetric weight given to abandoning prior investments versus accepting forward-looking opportunity costs.
- This reference-dependence property extends to riskless choice (Tversky-Kahneman 1991)
- Reference-Point Dependence
- Unequal treatment of the two sides — steeper below the reference than above it — is a frequent and consequential addition, but it is not constitutive: a system responding symmetrically to signed departures is reference-dependent in full.
This sourceFormalizes reference dependence and separates it from loss aversion and diminishing sensitivity as three distinct components of one model.
Supported in partVerified against the publisher's abstract
Abstract supports reference dependence and the loss-aversion asymmetry as a feature of the model; it does not say asymmetry is optional rather than constitutive.
“We present a reference-dependent theory of consumer choice, which explains such effects by a deformation of indifference curves about the reference point. The central assumption of the theory is that losses and disadvantages have greater impact on preferences than gains and advantages.”
- Unequal treatment of the two sides — steeper below the reference than above it — is a frequent and consequential addition, but it is not constitutive: a system responding symmetrically to signed departures is reference-dependent in full.
- Sunk Cost and Irreversible Commitment
- A person might feel loss aversion about foregone future gains; a person experiencing sunk-cost effects feels loss aversion about abandoned past investments, with Tversky and Kahneman (1991) formalizing the reference-dependent loss-aversion structure that underlies both.
This sourceFormalizes reference-dependent preferences and the loss-aversion mechanism that underlies the asymmetric weight given to abandoning prior investments versus accepting forward-looking opportunity costs.
- A person might feel loss aversion about foregone future gains; a person experiencing sunk-cost effects feels loss aversion about abandoned past investments, with Tversky and Kahneman (1991) formalizing the reference-dependent loss-aversion structure that underlies both.
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Registry ID ref:6e2fa2f3c390 · see in the full table