The Psychological and Neural Basis of Loss Aversion
Publication Date
2-2019
Document Type
Article
Organizational Units
College of Arts Humanities and Social Sciences, Psychology
Keywords
Loss aversion, Well-being, Prospect theory, Decision making, Emotion
Abstract
Loss aversion is a central element of prospect theory, the dominant theory of decision making under uncertainty for the past four decades, and refers to the overweighting of potential losses relative to equivalent gains, a critical determinant of risky decision making. Recent advances in affective and decision neuroscience have shed new light on the psychological and neurobiological mechanisms underlying loss aversion. Here, integrating disparate literatures from the level of neurotransmitters to subjective reports of emotion, we propose a novel neural and computational framework that links norepinephrine to loss aversion and identifies a distinct role for dopamine in risk taking for rewards. We also propose that loss aversion specifically relates to anticipated emotions and aspects of the immediate experience of realized gains and losses but not their long-term emotional consequences, highlighting an underappreciated temporal structure. Finally, we discuss challenges to loss aversion and the relevance of loss aversion to understanding psychiatric disorders. Refining models of loss aversion will have broad consequences for the science of decision making and for how we understand individual variation in economic preferences and psychological well-being across both healthy and psychiatric populations.
Copyright Date
11-29-2018
Copyright Statement / License for Reuse
All Rights Reserved.
Publication Statement
Copyright is held by the authors and Sage Publications. User is responsible for all copyright compliance. This article was originally published as:
Sokol-Hessner, P., & Rutledge, R. B. (2019). The psychological and neural basis of loss aversion. Current Directions in Psychological Science, 28(1), 20-27. https://doi.org/10.1177/0963721418806510
Rights Holder
Peter Sokol-Hessner, Robb B. Rutledge, and Sage Publications
Provenance
Received from CHORUS
Language
English (eng)
Publication Title
Current Directions in Psychological Science
Volume
28
Issue
1
First Page
20
Last Page
27
ISSN
1467-8721
Recommended Citation
Sokol-Hessner, P., & Rutledge, R. B. (2019). The psychological and neural basis of loss aversion. Current Directions in Psychological Science, 28(1), 20-27. https://doi.org/10.1177/0963721418806510