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Loss aversion
Journal article   Peer reviewed

Loss aversion

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

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Citation topics
6 Social Sciences
6.122 Economic Theory
6.122.1287 Risk Preferences
Web Of Science research areas
Economics
ESI research areas
Economics & Business
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