Show Summary Details

Page of

PRINTED FROM OXFORD HANDBOOKS ONLINE (www.oxfordhandbooks.com). © Oxford University Press, 2018. All Rights Reserved. Under the terms of the licence agreement, an individual user may print out a PDF of a single chapter of a title in Oxford Handbooks Online for personal use (for details see Privacy Policy and Legal Notice).

date: 23 February 2020

Abstract and Keywords

Kahneman and Tversky’s prospect theory is probably the most influential contribution to behavioral economics, and loss aversion is the most important element of this theory: Losses loom larger than gains. This chapter surveys the effect this notion has had on legal theory. It first provides an overview of the vast psychological literature on loss aversion. It then demonstrates the contribution made by studies of loss aversion in several contexts that are of particular interest to the law, including consumer behavior and litigation and settlement. The chapter further discusses the possibility of triggering loss aversion through legal framing, focusing on two examples: default rules and burden of proof. It also suggests that there is a striking correspondence between loss aversion and basic features of the law, and offers possible explanations for this correspondence. Finally, the chapter briefly discusses some of the normative implications of loss aversion for the law.

Keywords: Loss aversion, prospect theory, consumer behavior, litigation and settlement, contingent fees, default rules, burden of proof, evolutionary theories of the law, deontology, omission bias

Access to the complete content on Oxford Handbooks Online requires a subscription or purchase. Public users are able to search the site and view the abstracts and keywords for each book and chapter without a subscription.

Please subscribe or login to access full text content.

If you have purchased a print title that contains an access token, please see the token for information about how to register your code.

For questions on access or troubleshooting, please check our FAQs, and if you can''t find the answer there, please contact us.