The Behavioral Economics in Marketing’s Podcast Loss Aversion | Definition Minute | Behavioral Economics in Marketing Podcast
Jan 26, 2023
Quick definitions and real-world examples of loss aversion. A concise contrast between loss aversion and risk aversion. A finance-focused scenario showing how fear of losses shapes investor behavior. A brief intro to the new Definition Minute mini-format.
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People Hurt More Losing Than Winning
- Loss aversion means people feel losses more intensely than equivalent gains.
- The pain of losing can be about twice as powerful as the pleasure of gaining.
Investors Doubling Down On Losses
- Sandra gives a finance example where fearful investors avoid realizing losses.
- Those investors may double down on bad investments instead of selling at a loss.
Loss Aversion Versus Risk Aversion
- Loss aversion differs from risk aversion in focus and trigger.
- Loss-averse people dislike losing things they already own, while risk-averse people avoid uncertainty generally.