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The Power of Loss Aversion – part 2

Imagine you go back home one evening, open the mailbox and find several mails. In one of them, you have won a $100 gift card. You are so excited that you started making a list of some things you might buy. Then you opened the next mail to find out that a speed camera caught you speeding and you were fined $40. Your entire day is ruined! But technically, aren’t you still $60 better off? Why is it that the $40 fines that you could cover with the $100 gift card matters more than the gift card itself? Both were unexpected and the gain is larger than the loss anyway. So why all the fuss about this?

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