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A tendency among human decision makers to prefer losses involving risk (2) to sure-thing losses of equivalent monetary expectation. Experiments have shown that human decision makers typically prefer a gamble involving a 50 per cent probability of losing 100 units (such as dollars or pounds) to a sure loss of 50 units, although these two prospects are of equivalent monetary expectation; in fact, people typically value a 50 per cent probability of losing 100 units equally to a sure loss of about 40 units. See also framing effect, prospect theory. Compare risk aversion. risk-seeking adj.

Subjects: Psychology.

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