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.

Type

Journal article

Intellectual base

Primary research

Year

1991

DOI

10.2307/2937956

Link

https://doi.org/10.2307/2937956

Cited from

behavioral_economics, decision_science

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.

• 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.

• 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.

Verification

This reference passed the adversarial substantiation pipeline: it was checked to exist and to support the claim it is attached to. See how references were verified.

Registry ID ref:6e2fa2f3c390 · see in the full table