The marginal utility of losses diminishes in prospect theory
Prospect theory posits that the value function is S-shaped, showing diminishing sensitivity (or marginal utility) for both gains and losses as their magnitude increases.
The retrieved literature consistently supports the foundational tenet of prospect theory that value functions exhibit diminishing sensitivity (diminishing marginal utility) for losses as well as gains. Multiple papers utilize this specific formulation or model diminishing loss sensitivity during decision-making.
Xiaoyu S. A prospect-theoretic evolutionary game approach for disinformation governance in social-media ecosystems.. 2026. https://doi.org/10.1038/s41598-026-53697-9
Paper 1 incorporates prospect theory's value function to account for diminishing sensitivity to losses and gains.
See more details
Wei H, Zhong G, Liu J, Wei Y, Zhang X, Yang P, Xu X, Zhao M, Du J. Diminishing loss sensitivity during risky decision-making among male individuals with gambling disorder.. 2026. https://doi.org/10.1556/2006.2025.00230
Paper 4 models risky decision-making using diminishing loss sensitivity within a cognitive framework.
Barkan R. Self vs. Other in Affective Forecasting: The Role of Psychological Distance and Decision from Experience.. 2024. https://doi.org/10.3390/bs14111036
Paper 6 confirms that utility functions for individuals align with prospect theory, exhibiting diminishing sensitivity.
Efrosini Chloe Loukopoulou. Prospect Theory and Loss Aversion: A Cognitive Perspective on Economic Behavior. 2026. https://doi.org/10.2139/ssrn.7015438
Paper 9 outlines prospect theory's core principles, including how individuals perceive losses relative to a reference point with diminishing sensitivity.
The paper trail · every fact has a biography
Challenge the receipt
Citation formatting by citeproc-js (Frank Bennett) and the Citation Style Language project. Source and licenses.
Terms · Privacy · How verdicts work · Dispute this receipt