Prospect theory’s loss aversion is robust to stake size

Abstract Several papers have challenged the robustness of loss aversion, claiming that it is context-dependent and disappears for small stakes. These use a behavioral definition aversion may be confounded by diminishing sensitivity probability/event weighting under new version prospect theory (PT). We perform theory-based test controls these confounds. found significant both stakes high The overall coefficient varied between 1.25 1.45, less than commonly observed. Loss decreased slightly stakes, but effect was usually insignificant. Overall, our results indicate that, PT, robust to stake size.