Prospect theory (PT) is the dominant descriptive theory of decision making under risk today. For the modeling of … choices, PT relies on a psychologically founded separation of risk attitudes into attitudes towards outcomes, captured in a … in stakes on risk attitudes. We find that the stake increase is not reflected in the value function, but rather in the …

Loss aversion, risk aversion, and the probability weighting function (PWF) are three central concepts in explaining … decisionmaking under risk. I examine interlinkages between these concepts in a model of decisionmaking that allows for loss averse … commonly observed shapes of PWF and to risk aversion. In particular, I establish a connection between loss aversion and both …