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Cognitive Bias Cards · Card 5
Loss Aversion
A loss hurts twice as much.So we avoid any loss.
- A gain
- An equal loss
- Feels good
- Hurts about twice as much
Losing something hurts roughly twice as much as gaining the same amount feels good; which quietly distorts decisions in favor of avoiding any loss at all.
Feels this strongthe loss
Feels half as strongthe gain
₹100 loss₹100 gain
In Practice
Holding onto a losing stock "until it breaks even" instead of a winning one, purely to avoid feeling the loss, is loss aversion steering the decision, not logic.
Generic Example
Refusing to sell a barely-used gym membership at a loss, while easily walking away from money already spent on a meal, is the same asymmetry.
Ask yourself
Am I making this choice to avoid a loss, or because it's actually the better decision?