Loss Aversion and Anchoring Effect: A Review of Behavioral Economics
Research Article
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Loss Aversion and Anchoring Effect: A Review of Behavioral Economics

Yitian Li 1*
1 New channel Shenyang , Shenyang, 110000 , China
*Corresponding author: chloeli1126111@gmail.com
Published on 14 October 2025
Journal Cover
AEMPS Vol.225
ISSN (Print): 2754-1177
ISSN (Online): 2754-1169
ISBN (Print): 978-1-80590-385-7
ISBN (Online): 978-1-80590-386-4
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Abstract

The anchoring effect and loss aversion are two key ideas in behavioural economics that are examined in this article. The psychological significance of losses in comparison to comparable gains is highlighted by loss aversion, which was first put forth by Kahneman and Tversky. Although preliminary calculations indicated that the λ ratio should be around 2.25, more recent studies show that it depends on both context and magnitude. The universality of the phenomena is contested by meta-analyses. Women and older people routinely exhibit more loss-averse behaviour, which further complicates this bias and frequently results in inefficient effects like preference misrepresentation and policy stagnation. On the other hand, anchoring refers to the ongoing impact of starting values on later assessments. Even among experts in high-stakes judgements, anchoring is robust across domains despite differences in processes, such as quantitative priming, selective accessibility, and inadequate correction. Though their extent, persistence, and results differ depending on the task, environment, and demography, these results collectively show that these biases substantially impede rational decision-making. The study identifies areas for future behavioural economics research and emphasises the significance of connecting lab-based data with field settings.

Keywords:

Loss aversion, anchoring effect, behavioral economics

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Li,Y. (2025). Loss Aversion and Anchoring Effect: A Review of Behavioral Economics. Advances in Economics, Management and Political Sciences,225,14-18.

References

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Cite this article

Li,Y. (2025). Loss Aversion and Anchoring Effect: A Review of Behavioral Economics. Advances in Economics, Management and Political Sciences,225,14-18.

Data availability

The datasets used and/or analyzed during the current study will be available from the authors upon reasonable request.

About volume

Volume title: Proceedings of ICEMGD 2025 Symposium: Resilient Business Strategies in Global Markets

ISBN: 978-1-80590-385-7(Print) / 978-1-80590-386-4(Online)
Editor: Florian Marcel Nuţă Nuţă, Li Chai
Conference website: https://2025.icemgd.org/CAU.html
Conference date: 20 September 2025
Series: Advances in Economics, Management and Political Sciences
Volume number: Vol.225
ISSN: 2754-1169(Print) / 2754-1177(Online)