loss aversion
Fearing setbacks more
Loss aversion is the psychological tendency to feel losses more strongly than equivalent gains—losing twenty dollars stings more than finding twenty dollars pleases.
The concept, central to behavioral economics, explains why people often make irrational choices to avoid losses: Loss aversion keeps investors holding bad stocks too long.
It underlies the endowment effect, where people overvalue what they already own simply because giving it up feels like a loss.
- riskPossibility of harm
- fearEmotional response to threat
- fear of missing outAnxiety over exclusion
- regretSorrow over past actions
- holdingMaintaining physical possession
sunk cost · sunk cost fallacy · gamble · endowment · prospect · bias · behavioral economics · framing · mental accounting · pain · gain · investment · selling · stocks · portfolio · decision · irrational · psychology
- behavioral economicsnudge, anchoring, cognitive bias, heuristics, mental accounting
- cognitive biasesconfirmation bias, anchoring bias, negativity bias, framing effect, optimism bias
- gambling psychologygambler's fallacy, illusion of control, near miss, sunk cost fallacy, cognitive bias
- investment pitfallsovertrading, panic selling, overleveraging, overconfidence, poor timing
- mental modelsanchoring, confirmation bias, hindsight bias, Occam's razor, first principles
- thinking errorsad hominem, straw man, slippery slope, confirmation bias, sunk cost fallacy
loss aversionrisk seeking
Preferring uncertain outcomes
risk tolerance · risk appetite · reward seeking · thrill seeking · thrill-seeking
loss aversioncost-benefit analysis
Systematic comparison of advantages, disadvantages
loss aversionoptimism bias
Expecting favorable outcomes despite odds
overconfidence · irrational exuberance · equanimity · fearlessness
loss, lose, losing, loser, losers, losses, aversion, averse, aversive