factual
Smith Anticipated Prospect Theory's Loss Aversion
Adam Smith stated and used the asymmetry between gains and losses -- that we suffer more falling from a better to a worse state than we gain rising from worse to better, across fortune, reputation, and esteem -- anticipating the loss-aversion asymmetry that Kahneman and Tversky later documented in individual decision-making.
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Speaker
Vernon SmithEvidence Quote
“this notion of the asymmetry between gains and losses is not only clearly stated more than one place in Adam Smith, but it's actually used to derive some of his results. And my good friend Danny Kahneman... the documentation of this asymmetry between gains and losses.”
Created: 6/13/2026, 12:22:45 AM
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