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Loss aversion makes us fear losses more than we value gains from "summary" of Predictably Rational? by Richard B. McKenzie
Loss aversion is a powerful human bias that affects our decision-making process more than we may realize. It is the tendency for individuals to fear losses more than they value gains of equal magnitude. This phenomenon has been well-documented in various studies and has significant implications for our everyday choices. When faced with a decision that involves potential losses, our brains go into overdrive to avoid these negative outcomes. This can lead us to take irrational risks or avoid opportunities that could actually benefit us in the long run. For example, we may hold onto losing investments longer than we should, hoping to avoid realizing the loss, even when it is clear that we should cut our losses and move on. On the other hand, when presented with the opportunity for gains, we may not fully appreciate the potential benefits because our focus is primarily on avoiding losses. ...Similar Posts
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