Reflection effectSource: SFB 504
The reflection effect (Tversky & Kahneman, 1981) refers to having opposite preferences
for gambles differing in the sign of the outcomes (i.e. whether the outcomes are gains or
losses). Reflection effects involve gambles whose outcomes are opposite in sign, although
they do have the same magnitude. For example, most people would choose a certain gain of
$20 over a one-third chance of gaining $60. But they would choose a one-third chance of
losing $60 (and two-thirds chance of losing nothing) over a certain loss of $20.
The outcomes actually involve different domains (gain versus loss), that is, they
differ in sign (+$20 versus -$20). |