Loss aversion : Why you're not already rich - Deepstash
Loss aversion : Why you're not already rich

Loss aversion : Why you're not already rich

Lucky you are, you can make a wonderful bet. At equal propabilities :

  • 50% : You receive 120 $
  • 50% : You lose 100 $

Stop reading, would you accept this ?

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If you're like the majority of us, you refused this gamble.

Our brain is not familiar with statistics. You don't think to the utility of the bet, you see two situations :

  1. You change your current situation. You win a little quantity of money, cool. OR you lose almost the same amount, you swear against yourself, what an idiot decision
  2. You don't change your situation, nothing happens

This is the loss aversion, our brain tends to avoid losses.

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