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People often avoid risks to protect themselves from losses from "summary" of Predictably Rational? by Richard B. McKenzie
In our daily lives, we often find ourselves making decisions based on the desire to avoid risks. This desire is rooted in our innate need to protect ourselves from potential losses that may arise from taking those risks. When faced with a choice between two options - one that involves risk and another that is safer - we tend to lean towards the safer option, even if it means sacrificing potential gains. This behavior can be observed in various aspects of life, from financial decisions to personal choices. For example, when investing our money, we are more likely to choose low-risk options, such as bonds or savings accounts, rather than high-risk investments like stocks. This is because we fear the possibility of losing our hard-earned money and prefer the security that comes with lower returns. Similarly, in our relationships, we may avoid taking risks that could lead to rejection or disappointment. We may choose to stay in a familiar but unfulfilling situation rather than taking a chance on something new that could potentially bring us happiness. This tendency to avoid risks can be seen as a form of self-preservation. By opting for the safer option, we are protecting ourselves from the potential negative consequences that may arise from taking risks. While this behavior may help us avoid losses in the short term, it can also prevent us from seizing opportunities for growth and advancement in the long run.- Our aversion to risks is a natural response that is deeply ingrained in our psychology. It is a way for us to protect ourselves from harm and ensure our safety and security. However, it is important to strike a balance between avoiding risks and taking calculated chances in order to fully experience life and reach our true potential.
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