Loss aversion in riskless choice: A reference-dependent model.
Abstract
Much experimental evidence indicates that choice depends on the status quo or reference level: changes of reference point often lead to reversals of preference. 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. Implications of loss aversion for economic behavior are considered.
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Loss aversion suggests that, psychologically, people assign more utility to losses than to gains.
“Loss aversion suggests that, psychologically, people assign more utility to losses than to gains (Tversky and Kahneman, 1991).”
From Exploring the effects of human-centered AI explanations on trust and reliance (2023) · cites this paper as Tversky and Kahneman, 1991
Loss-framed messages motivate individual action by triggering loss aversion psychology regarding avoiding environmental deterioration.
“Loss-framed message more effectively motivates individual action by triggering loss aversion psychology regarding avoiding environmental deterioration [60].”
From The power of loss: message framing, climate anxiety, and engagement in personal carbon trading (2025) · cites this paper as [60]
Loss aversion is a specific phenomenon in behavioural economics whereby subjects are more strongly opposed to a given probability of losing a certain amount than to winning that same amount.
“Loss aversion is a specific phenomenon in behavioural economics, whereby subjects are more strongly opposed to a given probability of losing a certain amount than to winning that same amount [26].”
From Bonsai trees in your head: how the pavlovian system sculpts goal-directed choices by pruning decision trees (2012) · cites this paper as [26]
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- Authors
- Tversky, A., & Kahneman, D.
- Affiliations
- Stanford University (US)
- University of California, Berkeley (US)
- Venue
- The Quarterly Journal of Economics
- Publisher
- Oxford University Press (OUP)
- Published
- 1991-11-01
- Volume
- 106
- Issue
- 4
- Pages
- 1039-1061
- ISSN
- 0033-5533 (ISSN-L)
- 1531-4650
- OpenAlex
- W2030874315
- Cited by
- 6,432
- References
- 26
- Citations by year
- 2026: 239 · 2025: 290 · 2024: 332 · 2023: 316 · 2022: 305 · 2021: 329 · 2020: 315 · 2019: 346 · 2018: 290 · 2017: 264 · 2016: 264 · 2015: 308 · 2014: 286 · 2013: 284 · 2012: 277
- FWCI
- 14.70
- Type
- journal article
- Language
- en
- Open access
- closed
- Locations
- The Quarterly Journal of Economics (publishedVersion)
- RePEc: Research Papers in Economics (submittedVersion)
- Topics
- Social Sciences › Decision Sciences › General Decision Sciences › Decision-Making and Behavioral Economics
- Social Sciences › Safety Research › Experimental Behavioral Economics Studies
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Economic and Environmental Valuation
- Keywords
- loss aversion, reference dependence, consumer choice, status quo bias, indifference curves, preference reversal, reference points, economic behavior
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