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In cognitive science and behavioral economics, loss aversion refers to a cognitive bias in which the same situation is perceived as worse if it is framed as a loss, rather than a gain. [ 1 ] [ 2 ] It should not be confused with risk aversion , which describes the rational behavior of valuing an uncertain outcome at less than its expected value .
Overall, the study by Gneezy and Potters emphasizes the existence of myopic loss aversion, demonstrating how this bias can result in non-optimal decisions. By analyzing how prospect theory and myopic loss aversion influence decision-making, it provides the ability for researchers and policymakers to create interventions that help people make ...
A famous loss-aversion experiment is to offer a subject two options: They can either either receive something like $30 in guaranteed money — or a coin flip where they can receive either $100 or ...
Loss aversion, where the perceived disutility of giving up an object is greater than the utility associated with acquiring it. [ 74 ] (see also Sunk cost fallacy ) Pseudocertainty effect , the tendency to make risk-averse choices if the expected outcome is positive, but make risk-seeking choices to avoid negative outcomes.
This is what behavioral psychologists call loss aversion. ... Many scammers use manipulation tactics to prey on negative money mindsets like conservatism bias and loss aversion — even the fear ...
By David Lovell, Managing Director – Head of Marketing Behavioral Finance – Actionable Insights One of the more well-known behavioral biases is loss aversion. Loss aversion is a common trait ...
The correlation between the two theories is so high that the endowment effect is often seen as the presentation of loss aversion in a riskless setting. However, these claims have been disputed and other researchers claim that psychological inertia , [ 20 ] differences in reference prices relied on by buyers and sellers, [ 3 ] and ownership ...
A cognitive bias is a systematic pattern of deviation from norm or rationality in judgment. [1] ... to avoid risk and loss (loss aversion). [31] In status quo bias, ...