Prospect Theory in Large Language Models: A Meta-Analysis of Loss Aversion, Diminishing Sensitivity, and Probability Weighting

Computer Science > Artificial Intelligence

[Submitted on 22 Oct 2026]

Title:Prospect Theory in Large Language Models: A Meta-Analysis of Loss Aversion, Diminishing Sensitivity, and Probability Weighting

View PDFAbstract:Prospect theory splits risky choice into three parts: loss aversion, measured by the relative weight of losses to gains, $\lambda$ (e.g., $\lambda = 2$ implies that losses weigh twice as much as gains), diminishing sensitivity to the size of outcomes (i.e., the curvature and linearity of the value function), and the nonlinear weighting of probabilities. I examined whether Large Language Models (LLMs) display the same properties as people by meta-analyzing 102 fitted estimates from 11 studies covering 32 language models. The three components emerge differently. Loss aversion is modest: the pooled $\lambda$ is 1.26 (95% CI 1.06 to 1.46), far below the strongest human meta-analytic estimate ($\lambda = 1.96$) and compatible with more conservative ones (1.07 and 1.31). Matched by design, LLMs are compatible with people when gains and losses are symmetric ($\lambda = 1.15$ against 1.07), but well below them when losses are smaller than gains (1.46 against 2.3), where human loss aversion is strongest. Value functions are close to linear rather than concave under the Tversky-Kahneman method (1.01, against a human value of 0.67), but more concave than in people under the Tanaka method (0.52, against 0.67), so diminishing sensitivity depends on how it is measured. Probability weighting shows a human-like inverse S shape ($\gamma = 0.81$ under Tversky-Kahneman and 0.84 under the Tanaka method), though on few studies. In sum, LLMs show little loss aversion and little diminishing sensitivity, but retain human-like probability distortion, yet these generalizations shift when looking at specific model families and fitting methods.

Additional Features

Current browse context:

cs.AI

References & Citations

Loading...

Bibliographic and Citation Tools

Bibliographic Explorer (What is the Explorer?)

Connected Papers (What is Connected Papers?)

Litmaps (What is Litmaps?)

scite Smart Citations (What are Smart Citations?)

Code, Data and Media Associated with this Article

alphaXiv (What is alphaXiv?)

CatalyzeX Code Finder for Papers (What is CatalyzeX?)

DagsHub (What is DagsHub?)

Gotit.pub (What is GotitPub?)

Hugging Face (What is Huggingface?)

ScienceCast (What is ScienceCast?)

Demos

Recommenders and Search Tools

Influence Flower (What are Influence Flowers?)

CORE Recommender (What is CORE?)

arXivLabs: experimental projects with community collaborators

arXivLabs is a framework that allows collaborators to develop and share new arXiv features directly on our website.

Both individuals and organizations that work with arXivLabs have embraced and accepted our values of openness, community, excellence, and user data privacy. arXiv is committed to these values and only works with partners that adhere to them.

Have an idea for a project that will add value for arXiv's community? Learn more about arXivLabs.