Today we discuss David Kahneman & Amos Tversky's discovery of Loss Aversion, which is a cognitive bias in which people are more averse to losses than they are to gains. We are even more likely to take on risk to avoid a loss rather than gain rewards.

Learn how to apply Loss Aversion to your product in today's episode.

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References:

Tversky, A., & Kahneman, D. (1979). Prospect theory: An analysis of decision under risk. Econometrica: Journal of the Econometric Society, 47(2), 263-291. https://www.jstor.org/stable/1914185?seq=1.

Kahneman, D., & Tversky, A. (1984). Choices, values, and frames. American psychologist, 39(4), 341. https://psycnet.apa.org/record/1984-09731-001.

Goldstein, W. M., & Weber, M. (1994). A cognitive process theory of risk perception and attitudes.

In M. W. Schofield (Ed.), Choice and decision making: Psychological and normative considerations (pp. 187-226). Cambridge: Cambridge University Press.

Gigerenzer, G., & Selten, R. (2001). Bounded rationality: The adaptive toolbox. Cambridge, MA: MIT Press.

Camerer, C.F. (2003). Behavioral game theory: Experiments in strategic interaction. Princeton, NJ: Princeton University Press.

Miller, N. (2003). Prospect theory and macroeconomics: The state of the art. International Review of Economics & Finance, 12(3), 445-457.

Tversky, A., & Kahneman, D. (1991). Loss aversion in riskless choice: A reference-dependent model. The Quarterly Journal of Economics, 106(4), 1039-1061.

Thaler, R. H. (1985). Mental accounting and consumer choice. Marketing Science, 4(3), 199-214.

Camerer, C. F. (1995). Individual decision making. In J. Kagel & A.E. Roth (Eds.), The Handbook of Experimental Economics (pp. 587-703). Princeton, NJ: Princeton University Press.

Columbia University's Mailman School of Public Health. "Global study confirms influential theory behind loss aversion." ScienceDaily. ScienceDaily, 18 May 2020. .