>He had to pay, on average, $7 and some change to buy the mugs back from people. By contrast, he had to sell the mug for about $3 and change to get them to buy when they did not already own it. Kahneman’s conclusion was that people put a higher price on loss than they do gain.

That's a weird conclusion. Let's say I value the mug at $5. Obviously I'm not going to sell it for $5, because the transaction itself is an effort, so I would lose! The opposite for buying, obviously I'm not going to buy a mug for $5 if I think it's worth exactly $5.

The price a rational person is willing to accept for a thing he owns must always be higher than what he values it at.

In a general case, probability of gain is obviously worth less than the same probability of loss, because you need bigger relative return to make up for the loss.