Enhance Your Learning with Economics - Loss Aversion Flash Cards for quick understanding
A cognitive bias where individuals feel the pain of losses more strongly than the pleasure of equivalent gains.
A behavioral economic theory that describes how people make decisions under uncertainty, incorporating loss aversion as a key component.
1. People being more upset about losing $100 than they are happy about gaining $100. 2. Investors holding onto losing stocks in the hope of recovering their losses. 3. Consumers being more likely to switch brands to avoid a price increase than to take advantage of a price decrease.
1. People tend to avoid taking risks to prevent potential losses. 2. Loss aversion can lead to irrational decision-making and biases in various economic contexts. 3. Understanding loss aversion can help businesses design effective marketing strategies.
A field of study that combines psychology and economics to understand how individuals make economic decisions, including the influence of cognitive biases like loss aversion.
The process of selecting a course of action from multiple alternatives, often influenced by factors such as risk, uncertainty, and cognitive biases like loss aversion.
A tendency to prefer avoiding risks and potential losses rather than taking risks for potential gains, often influenced by loss aversion.
A theory in economics that models how individuals make choices based on their preferences and the expected utility or satisfaction they derive from different outcomes, taking into account factors like loss aversion.
Systematic patterns of deviation from rationality in judgment and decision-making, including loss aversion, that can lead to irrational behavior and suboptimal choices.
The study of how psychological factors, such as emotions, biases, and cognitive processes, influence economic behavior and decision-making, including the role of loss aversion.
A branch of psychology that focuses on understanding the psychological processes underlying economic behavior, including the study of loss aversion and its effects on decision-making.
A branch of economics that uses controlled experiments to study economic behavior and test theories, including the effects of loss aversion on decision-making.
The tendency of investors to hold onto losing investments for longer periods than winning investments, driven by the aversion to realizing losses and the hope of recovering them.
The tendency of consumers to be more sensitive to price increases than price decreases, often leading to different buying behaviors and preferences influenced by loss aversion.
The use of loss aversion principles in marketing strategies, such as emphasizing potential losses or missed opportunities to motivate consumers to take action or make a purchase.