Economics Dictionary of ArgumentsHome
| |||
|
| |||
| Loss aversion: Loss aversion is a psychological concept that describes the tendency for people to feel the pain of a loss more intensely than the pleasure of an equivalent gain. Loss aversion can shape our decision-making in financial decisions. See also Decisions, Decision theory, Decision-making processes._____________Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Lexicon of Arguments. | |||
| Author | Concept | Summary/Quotes | Sources |
|---|---|---|---|
|
Stephanos Bibas on Loss Aversion - Dictionary of Arguments
Parisi I 63 Loss Aversion/Bibas/Jolls: “Loss aversion” refers to people’s tendency to attach asymmetrically large significance to “negative” occurrences—the “I hate to lose more than I like to win” phenomenon (Bibas, 2004(1), p. 2508). Such an approach marks a form of double departure from expected utility theory, under which the relationship between a particular state of affairs (A) and an alternative state of affairs (B) is represented by the relationship between the individual’s utility in state of affairs A and the individual’s utility in state of affairs B, or, as Kahneman and Tversky (1979(2), p. 264) put the point, “the domain of the utility function is final states … rather than gains or losses.” Under loss aversion, unlike under expected utility theory, not only are “the carriers of value … changes” (Kahneman and Tversky, 1979(2)), p. 277), but a change for the worse will exert an outsized impact—a form of nonoptimizing behavior (...) >Bounded rationality/Jolls, >Optimism bias/Bibas, >Plea bargain/Bibas. 1. Bibas, Stephanos (2004). “Plea Bargaining Outside the Shadow of Trial.” Harvard Law Review 117: 2463–2547. 2. Kahneman, Daniel and Amos Tversky (1979). “Prospect Theory: An Analysis of Decision Under Risk.” Econometrica 47: 263–291. Jolls, Christine, „Bounded Rationality, Behavioral Economics, and the Law“. In: Parisi, Francesco (ed) (2017). The Oxford Handbook of Law and Economics. Vol 1: Methodology and Concepts. NY: Oxford University Press._____________Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition. |
Bibas, Stephanos Parisi I Francesco Parisi (Ed) The Oxford Handbook of Law and Economics: Volume 1: Methodology and Concepts New York 2017 |
||
> Counter arguments against Bibas
> Counter arguments in relation to Loss Aversion
