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

Prospect theory splits risky choice into three parts: loss aversion, measured by the relative weight of losses to gains, $λ$ (e.g., $λ= 2$ 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