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An important idea, which characterizes law in society, is a reluctance to move from the status quo. In general, one can argue that legal institutions and legal doctrine are not engaged in the redistribution of wealth from one party to another. This paper explores a possible explanation for that principle. The authors' research suggests that, across a wide range of entitlements and in a variety of contexts, individuals value losses more than foregone gains. The paper argues, as a matter of efficiency, that law and social policy might have developed in a manner consistent with this valuation disparity. Furthermore, this valuation disparity can be transformed into conceptions of fairness, and, as a matter of fairness, legal decisions might have developed in a manner consistent with this fairness norm. In the first part of the paper, the economic and psychological research on the valuation disparity is described in detail. The paper then examines a series of legal doctrines, all of which can be explained by the valuation disparity phenomenon revealed in the experimental data. Cohen and Knetsch conclude that the behaviour of legal institutions and actors can be explained by the valuation disparity.