Loss Aversion Explained: Why Losses Hurt 2x More
Last updated: April 2026 Loss aversion is the behavioral tendency to feel the pain of a loss roughly twice as strongly as the pleasure of an equivalent gain. Daniel Kahneman and Amos Tversky quantified it in prospect theory (1979, 1992): the loss-aversion coefficient λ ≈ 2.25. It explains the disposition effect in trading, the endowment … Read more