3 ms·
>Loss aversion is perfectly reasonable. Is your claim that the disproportionate level of aversion is reasonable? It's my understanding this is the actual heart
by bumby 5y ago
>Loss aversion is perfectly reasonable.
Is your claim that the disproportionate level of aversion is reasonable? It's my understanding this is the actual heart of the claim, not simply "people don't like losing things" but rather "people hate losing things even more than they like gaining the same thing."
Related: the endowment effect. "The endowment theory can be defined as "an application of prospect theory positing that loss aversion associated with ownership explains observed exchange asymmetries."[1]. The asymmetries as evidence that it is actually not reasonable/rational.
[1]https://en.wikipedia.org/wiki/Endowment_effect https://en.wikipedia.org/wiki/Endowment_effect
- vharuck 5y agoTempered loss aversion is the better way to approach things when there is no upper limit to winning, but the lower limit to losing is getting kicked out of the game. It's why "the house always wins" is true even for fair casino games. The hard part is getting the right balance.