loss aversion


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loss aversion

In psychology and economics, the principle that individuals are more likely to make decisions that minimize their losses than maximize their gains, i.e., that a loss is more uncomfortable than an equal-sized gain is pleasurable.
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It is thought that loss aversion and its underpinning value computations may constitute a key feature of neural activity in the amygdala and ventral striatum (DeMartino et al, 2010).
The first offerings -- now available for licensing -- assess risk tolerance, loss aversion and decision consistency, as well as provide turnkey custom portfolio assessment and building.
My thoughts were driven by the broader behavioral economics theory of loss aversion.
After characterizing the problem situation and defining the research question, the goal of this research can be established as: to investigate the relationship between the level of earnings opacity (measured by country-level measures of Income smoothing, loss aversion and earnings aggressiveness) and a company's informational environment (taking into consideration the accounting standards and the legal origins of the system).
In the related loss aversion effect, people would rather leave a situation as is, rather than risk a loss.
Loss aversion was first demonstrated by Daniel Kahneman (with his research cohort, the late Amos Tversky) beginning in the late 1970s.
When, however, the marginal utility of an unexpected loss is larger than the marginal utility of an unexpected win, a consumer exhibits loss aversion known from prospect theory (Kahneman & Tversky, 1979), and uncertainty of outcome does not create any net utility.
Myopic loss aversion means that declines in market value cause a greater emotional response than actual gains on investment capital, as investors are most prone to emotional mistakes after substantial declines.
The decision is motivated by the concept of loss aversion.
In general, loss aversion contends that people suffer losses to a greater extent than they enjoy gains of the same magnitude.
We speculated that loss aversion would play an important role (Kahneman & Tversky, 1979).
Its proprietary platform uses loss aversion, financial incentives and targeted messaging to engage eligible health centre users.