Two Minute Bit
Psychology · ~1 min

Losing $100 hurts about twice as much as winning $100 feels good.

Win $1001x pleasureLose $100~2x painsame $100 each side$$
The same $100, but the loss weighs about twice as much. That is loss aversion: a loss stings about double an equal win.

The same $100, but the loss weighs about twice as much. That is loss aversion: a loss stings about double an equal win.: Win $100 · 1x pleasure · Lose $100 · ~2x pain · same $100 each side

Kahneman and Tversky found that the pain of a loss is about twice as powerful as the pleasure of an equal gain. So we refuse fair coin-flips, cling to losing stocks, and dread giving things up: the math says break-even, but the brain scores losses double.

We're not built to weigh gains and losses evenly. Notice when fear of losing (not the real odds) is driving the call.

Sources

Tversky & Kahneman, Advances in Prospect Theory (1992)

confidence: verified · every bit is fact-checked before it ships

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