key term - Loss Aversion

Definition

Loss aversion refers to the psychological tendency of individuals to feel the pain of losing something more strongly than the pleasure of gaining something. In other words, people are more motivated to avoid losses than they are to acquire equivalent gains.

Related terms

Risk Aversion: The tendency for individuals to prefer avoiding risks or uncertain outcomes rather than taking a chance on potential gains.

Endowment Effect: The inclination for people to value an object or possession that they already own higher than its market value.

Sunk Cost Fallacy:

The irrational belief that one should continue with a project or investment because they have already invested time, effort, or money into it, even if it no longer makes sense to do so.