10. Loss Aversion - Deepstash
10. Loss Aversion

10. Loss Aversion

Finding $100 would make you happy, but that happiness wouldn’t equal the distress you’d feel if you lost $100. The negative hit from a loss is stronger than the positive hit of a comparable gain; loss aversion explains why investors ignore paper losses and hold falling stocks. Marketers exploit loss aversion to sell. For example, persuading to buy stuffs by describing how much money they’ll lose without it is easier than getting them to buy it by showing the savings they’ll gain. This fear causes people to stay in their comfort zones with investments, personal risks and purchases.

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Dobelli shared some common thinking mistakes. Knowing these errors won’t help you avoid them completely, but it will help you make better decisions – or at least teach you where you slipped.

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