loss aversion in psychology

Loss aversion is a concept in psychology that refers to the tendency for people to strongly prefer avoiding losses over acquiring gains of the same or even higher value. In other words, the pain of losing something is felt more strongly than the pleasure of gaining something of equal value.

This bias is rooted in the idea that humans are more sensitive to negative experiences than positive ones. Loss aversion is often attributed to the work of psychologist Daniel Kahneman and his colleague Amos Tversky, who first proposed the concept in their Prospect Theory.

Research has shown that loss aversion affects people in various contexts, including decision making, risk taking, and social interactions. It can lead individuals to make decisions that prioritize avoiding losses over maximizing gains, even if the latter option may be more beneficial in the long run.

For example, a person may be more willing to take risks to avoid losing money than to gain an equivalent amount of money. This can lead to behaviors such as holding onto losing investments longer than advisable or refusing to sell an asset at a loss.

Overall, loss aversion is a powerful psychological force that can significantly influence the choices and behaviors of individuals.

Geoffrey W. Sutton, PhD is Emeritus Professor of Psychology. He retired from a clinical practice and was credentialed in clinical neuropsychology and psychopharmacology. His website is  www.suttong.com

 

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Dr. Sutton’s posts are for educational purposes only. See a licensed mental health provider for diagnoses, treatment, and consultation.