Question
Question #1 What is loss aversion? __ Question #2 How does loss aversion influence our decision -making? __ Question #3 What are some examples of how loss aversion affects our lives? __ pen Ended Questions Question #1_How has
Solution
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(227 Votos)
António
Elite · Tutor por 8 anos
Resposta
1. Loss aversion is the tendency to prefer avoiding losses over acquiring equivalent gains.2. Loss aversion influences decision-making by leading individuals to take actions that minimize losses rather than maximize gains.3. Examples include the endowment effect, status quo bias, and the purchase of insurance.
Explicação
1. Loss aversion is a concept in behavioral economics that describes the tendency of individuals to prefer avoiding losses to acquiring equivalent gains. It is a key principle in the prospect theory developed by Daniel Kahneman and Amos Tversky.2. Loss aversion influences decision-making by causing individuals to place a higher value on avoiding losses than on acquiring equivalent gains. This can lead to risk-averse behavior, where individuals are more likely to avoid potential losses than seek potential gains.3. Examples of how loss aversion affects our lives include: - Endowment effect: Once individuals own something, they place a higher value on it than they would if they didn't own it. - Status quo bias: People tend to prefer things to remain as they are, rather than taking a risk to improve their situation. - Insurance purchases: People are willing to pay for insurance to avoid potential losses, even if the probability of the loss occurring is low.