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

arXiv cs.AIOctober 27, 2026en

arXiv cs.AI

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arXiv:2610.33103v1 Announce Type: new Abstract: 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 belo

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