Murdoch University Research Repository

Welcome to the Murdoch University Research Repository

The Murdoch University Research Repository is an open access digital collection of research
created by Murdoch University staff, researchers and postgraduate students.

Learn more

Loss aversion

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

Link to Published Version:
*Subscription may be required


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).

Item Type: Journal Article
Publisher: Springer-Verlag
Copyright: © 2009 Springer-Verlag.
Item Control Page Item Control Page