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 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 $λ$ is 1.26 (95% CI 1.06 to 1.46), far below the strongest human meta-analytic estimate ($λ= 1.96$) 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 ($λ= 1.15$ 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 ($γ= 0.81$ 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.