PSYCHOLOGY
psychology
economics
risk
bias
Loss Aversion: The Pain of Losing
The pain of losing $100 is twice as intense as the pleasure of gaining $100. We are wired to protect what we have, not to gain more.
Daniel Kahneman• 5 min read
2:1 Ratio
Psychologically, losses loom larger than gains. This explains why people stay in bad jobs (fear of losing security) rather than risk a better career. It also explains why stock market crashes cause panic selling.
Framing
"You will save $50" is less persuasive than "You are losing $50 every month."