Loss Aversion
Loss aversion is a concept in behavioral economics that describes the tendency for people to strongly prefer avoiding losses over acquiring equivalent gains. Essentially, the emotional impact of losing something is felt more strongly than the pleasure derived from gaining something of equal value.
Understanding loss aversion helps individuals and businesses balance risks by considering the emotional impact of potential losses.
Example: Individuals might be more distressed by losing $100 than they are happy about gaining $100.
Areas it can help in: Financial planning, Negotiations, Investment Decisions
