This reflects what might be called the “decreasing marginal disutility of losses.” Losing the first $100 hurts worse than losing the second $100. So although losing $200 may be twice as bad objectively as losing $100, it is not twice as bad subjectively. What that means is that taking the risk to perhaps avoid losing anything is a pretty good deal. Thus, as Kahneman and Tversky again point out, people embrace risk—they are “risk seeking”—in the domain of potential losses.
