WHILE MOST PEOPLE have likely never heard of loss aversion, the concept — arising in the social sciences some four decades ago — is among the most influential in the behavioral sciences. In a nutshell, it holds that when people make decisions, the impact of losing something carries greater weight than the impact of gaining something of similar value — or that, in the often-quoted words of psychologists Daniel Kahneman and Amos Tversky, “losses loom larger than gains.”
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