Economics Loss Aversion Questions
Loss aversion influences negotiation outcomes by causing individuals to place a higher value on avoiding losses compared to acquiring gains. This bias leads negotiators to be more risk-averse and reluctant to make concessions that may result in losses. As a result, negotiations tend to be more competitive and less cooperative, with both parties being less willing to compromise. Additionally, loss aversion can lead to impasse or breakdown in negotiations as individuals become more focused on avoiding losses rather than finding mutually beneficial solutions.