D. KAHNEMAN AND A. TVERSKY The Reflection Efect The previous section discussed preferences between positive prospects, i. e prospects that involve no losses. What happens when the signs of the outcomes are reversed so that gains are replaced by losses? The left-hand column of Table I displays four of the choice problems that were discussed in the previous sect and the right-hand column displays choice problems in which the signs of outcomes are reversed we use -x to denote the loss of x and to denote prevalent preference, 1. e, the choice made by the majority of subjects TABLE I PREFERENCES BETWEEN POSITIVE AND NEGATIVE PROSPECTS Positive prospects oblem3:(4,000,80)<(3,000) Problem4:(4,000,20)>(3,000,25) Problem 4: ( (3,000,90)>(6,000,,45) 6,000,45) Problem8:(3,000,002)<(6,000,001) Problen8':(-3,000,002)>(-6,000,001) [27] [73 N=66 [70 In each of the four problems in Table I the preference between negative prospects is the mirror image of the preference between positive prospects. Thus the reflection of prospects around O reverses the preference order. We label this pattern the reflection effect Let us turn now to the implications of these data First, note that the reflection effect implies that risk aversion in the positive domain is accompanied by risk seeking in the negative domain, In Problem 3, for example, the majority of subjects were willing to accept a risk of 80 to lose 4,000, in preference to a sure loss of 3, 000, although the gamble has a lower expected value The occurrence of isk seeking in choices between negative prospects was noted early by Markowitz [29]. Williams [48] reported data where a translation of outcomes produces a dramatic shift from risk aversion to risk seeking. For example, his subjects wer indifferent between(100, 65;-100, 35)and(0), indicating risk aversion. They were also indifferent between(-200, 80)and (100), indicating risk seeking.A recent review by Fishburn and Kochenberger [14] documents the prevalence of risk seeking in choices between negative prospects Second, recall that the preferences between the positive prospects in Table I are inconsistent with expected utility theory. The preferences between the cor- responding negative prospects also violate the expectation principle in the same manner. For example, Problems 3 and 4, like Problems 3 and 4, demonstrate that outcomes which are obtained with certainty are overweighted relative to uncertain outcomes. In the positive domain, the certainty effect contributes to a risk averse preference for a sure gain over a larger gain that is merely probable.In the negative domain, the same effect leads to a risk seeking preference for a loss