Acceptable losses: the debatable origins of loss aversion

  • Eldad YechiamEmail author


It is often claimed that negative events carry a larger weight than positive events. Loss aversion is the manifestation of this argument in monetary outcomes. In this review, we examine early studies of the utility function of gains and losses, and in particular the original evidence for loss aversion reported by Kahneman and Tversky (Econometrica  47:263–291, 1979). We suggest that loss aversion proponents have over-interpreted these findings. Specifically, the early studies of utility functions have shown that while very large losses are overweighted, smaller losses are often not. In addition, the findings of some of these studies have been systematically misrepresented to reflect loss aversion, though they did not find it. These findings shed light both on the inability of modern studies to reproduce loss aversion as well as a second literature arguing strongly for it.



The author would like to thank Nathaniel J.S. Ashby, Elias Khalil, and Liat Levontin for their helpful comments.


This work was supported by the I-CORE program of the Planning and Budgeting Committee and the Israel Science Foundation (1821/12).

Compliance with ethical standards

Conflict of interest

The author (EY) declares that he has no conflict of interest.

Ethical approval

This article does not contain any studies with human participants or animals performed by any of the authors.


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Authors and Affiliations

  1. 1.Max Wertheimer Minerva Center for Cognitive Studies, Faculty of Industrial Engineering and ManagementTechnion, Israel Institute of TechnologyHaifaIsrael

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