Sway: The Irresistible Pull of Irrational Behavior

benefits apply only to future workers. Loss aversion is a powerful conservative force that favors minimal changes from the status quo in the lives of both institutions and individuals. This conservatism helps keep us stable in our neighborhood, our marriage, and our job; it is the…

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The only people who are immune to this mistake are neurologically impaired patients who can't feel any emotion at all. In most situations, these people have very damaged decision-making abilities. And yet, because they don't feel the extra sting of loss, they are able to avoid the costly emotional errors brought on by loss aversion. Consider this e

announcement was made, she was no longer willing to trade. Endowment effect!” “These negotiations are going nowhere because both sides find it difficult to make concessions, even when they can get something in return. Losses loom larger than gains.” “When they raised their prices, demand dried up.” “He just hates the idea of selling his house for l

Once we understand loss aversion and that many things can be framed as either gains or losses—and that the loss framework is more motivating—maybe we can reframe choices, such as how much to contribute to retirement savings, in a way that will persuade us to act in ways that are more consistent with our long-term well-being.