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David Gal (2006) argued that many of the phenomena commonly attributed to loss aversion, including the status quo bias, the endowment effect, and the preference for safe over risky options, are more parsimoniously explained by psychological inertia than by a loss/gain asymmetry. Gal and Rucker (2018) made similar arguments.
Daniel Kahneman, who won the 2002 Nobel Memorial Prize in Economics for his work developing prospect theory. Prospect theory is a theory of behavioral economics, judgment and decision making that was developed by Daniel Kahneman and Amos Tversky in 1979. [1]
The correlation between the two theories is so high that the endowment effect is often seen as the presentation of loss aversion in a riskless setting. However, these claims have been disputed and other researchers claim that psychological inertia , [ 20 ] differences in reference prices relied on by buyers and sellers, [ 3 ] and ownership ...
Begala’s case is that loss aversion can be used in non-inflation contexts to make Americans realize that the results of the 2024 election could mean losses for them in things like abortion ...
When it comes to money, it always helps to take a step back, acknowledge your emotions and weigh the risks and rewards. Hear an expert's take on 8 common mindsets that could be holding you back ...
Mental accounting can result in people demonstrating greater loss aversion for certain mental accounts, resulting in cognitive bias that incentivizes systematic departures from consumer rationality. Through an increased understanding of mental accounting differences in decision making based on different resources, and different reactions based ...
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An individual's utility function is impacted by their reference point. Reference dependence asserts a value onto a product that can be assigned with numerous differing attributes the value is measured by the deviation from a reference point or status quo, which is either a gain or a loss in value.