Recognizing and Avoiding Loss Aversion
How to Invest with Greater Peace of Mind.
Have you ever wondered why you find it so hard to take risks in the stock market, even when the prospect of profits is tempting? Or why you tend to make hasty decisions to avoid a perceived loss? The answer lies in a psychological phenomenon called loss aversion. This concept from behavioral economics explains why losses—or financial setbacks—weigh more heavily on us emotionally than gains can excite us.
In this article from ING, you’ll learn—through an interview with Nikolas Kreuz of INVIOS—what loss aversion means, how it influences our behavior, and how you can use this knowledge to make better decisions.
