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Loss aversion

Blavatskyy, P.R. (2011) Loss aversion. Economic Theory, 46 (1). pp. 127-148.

Link to Published Version: http://dx.doi.org/10.1007/s00199-009-0504-7
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Abstract

Loss aversion is traditionally defined in the context of lotteries over monetary payoffs. This paper extends the notion of loss aversion to a more general setup where outcomes (consequences) may not be measurable in monetary terms and people may have fuzzy preferences over lotteries, i. e., they may choose in a probabilistic manner. The implications of loss aversion are discussed for expected utility theory and rank-dependent utility theory as well as for popular models of probabilistic choice such as the constant error/tremble model and a strong utility model (that includes the Fechner model of random errors and Luce choice model as special cases).

Publication Type: Journal Article
Publisher: Springer-Verlag
Copyright: © 2009 Springer-Verlag.
URI: http://researchrepository.murdoch.edu.au/id/eprint/30541
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