Loss aversion is risk aversion's evil twin. A loss-averse agent tends to avoidsavoid uncertain gambles, not because every unit of money brings him a bit less utility, but because he weighs losses more heavily than gains, always treating his current level of money as somehow special.
Loss aversion is risk aversion's evil twin. A loss-averse agent tends to avoids uncertain gambles, not because every unit of money brings him a bit less utility, but because he weighs losses more heavily than gains, always treating his current level of money as somehow special.