Loss aversion has been shown to influence decision making in a host of social and economic contexts. This paper presents a novel assessment strategy that seeks to address issues of student engagement and academic integrity through the combination of the concepts of loss aversion and peer-assessment. Students faced the possibility of losing a small number of the marks they had previously “earned” in a task in which they were required to accurately grade a peer’s work. A detailed rubric was designed to support students grading the work. Based on data collected via a survey and interviews, we show that students, despite disliking this assessment strategy, were more engaged in the assessment and felt that their critical thinking skills were enhanced as a result of this approach. The implications from this study includes the need for detailed guidance for students through, for example, rubrics, lecturer accessibility and exemplars.