Previous studies of loss aversion in decisions under risk have led to mixed results. Losses appear to loom larger than gains in some settings, but not in others. The current paper clarifies these results by highlighting six experimental manipulations that tend to increase the likelihood of the behavior predicted by loss aversion. These manipulations include: (1) framing of the safe alternative as the status quo; (2) ensuring that the choice pattern predicted by loss aversion maximizes the probability of positive (rather than zero or negative) outcomes; (3) the use of high nominal (numerical) payoffs; (4) the use of high stakes; (5) the inclusion of highly attractive risky prospects that creates a contrast effect; and (6) the use of long experiments in which no feedback is provided and in which the computation of the expected values is difficult. In addition, the results suggest the possibility of learning in the absence of feedback: The tendency to select simple strategies, like “maximize the worst outcome” which implies “loss aversion”, increases when this behavior is not costly. Theoretical and practical implications are discussed.

The principle of loss aversion is thought to explain a wide range of anomalousphenomena involving tradeoffs between losses and gains. In this article, I showthat the anomalies loss aversion was introduced to explain - the risky betpremium, the endowment effect, and the status-quo bias - are characterized notonly by a loss/gain tradeoff, but by a tradeoff between the status-quo andchange; and, that a propensity towards the status-quo in the latter tradeoff issufficient to explain these phenomena. Moreover, I show that two basicpsychological principles - (1) that motives drive behavior; and (2) thatpreferences tend to be fuzzy and ill-defined - imply the existence of a robustand fundamental propensity of this sort. Thus, a loss aversion principle isrendered superfluous to an account of the phenomena it was introduced toexplain.