1Good morning, everyone. Today we turn to a cornerstone of behavioural economics: loss aversion.
2The central claim is straightforward: losses feel roughly twice as powerful as equivalent gains.
3Contrary to what classical theory predicts, people do not evaluate outcomes purely rationally.
4Let me give you a concrete example involving a simple gamble with coins.
5Most participants refuse a bet where they might lose ten pounds or win twelve.
6Early researchers assumed this reflected fear, though later studies pointed to attention instead.
7What I want to emphasize here is that context dramatically reshapes these choices.
8In one experiment, framing a surgery by survival rates doubled its acceptance among patients.
9Moving on to applications, governments now exploit this bias when designing tax policies.
10It was not greed but the pain of losing that drove most investment decisions.
11To conclude, loss aversion remains influential, although its magnitude varies considerably across cultures.