He is a leader in the fields of behavioral economics (which he is also credited with co-founding), neuroeconomics, Judgment and Decision Making.

[citation needed] Hot-cold empathy gaps are one of Loewenstein's major contributions to behavioral economics.

The implications of this were explored in the realm of sexual decision-making, where young men in an unaroused "cold state" fail to predict that when they are in an aroused "hot state" they will be more likely to make risky sexual decisions, such as not using a condom.

[5] Along with co-authors Christopher Hsee, Sally Blount and Max Bazerman, Loewenstein[6] pioneered research on evaluability and joint-separate preference reversals.

This theory states that attributes of an option that are well known, such as GPA for college candidates, are given greater weight than attributes one knows little about, such as number of programs written in an obscure language, when one is evaluating options in isolation (separate evaluation).