All experiments
Prospect Theory
Loss Aversion
Losses loom larger than equivalent gains
~45 secKahneman & Tversky (1979)
You face a choice between a guaranteed small gain and a 50/50 gamble for a larger gain or moderate loss. The experiment measures your personal loss-aversion coefficient.
Three decisions
Each round presents a choice between a guaranteed gain and a 50/50 gamble. The gamble can win a larger amount or lose the same amount as the sure gain.
According to Prospect Theory, most people will prefer the sure gain even when the expected value of the gamble is equal — because losses feel roughly twice as powerful as equivalent gains.