Loss Aversion

People experience approximately twice as much pain from loss as they derive pleasure from gain.

Expected Value Example

Would you rather: Get $3,000 guaranteed? (EV: $3k) Have an 80% chance of getting $4,000, but a 20% chance of getting $0? (EV: $3.2k)

Most people choose A

Would you rather: Lose $3,000 guaranteed? (EV: -$3k) Have an 80% chance of losing $4,000, but a 20% chance of losing $0? (EV: -$3.2k)

Most people choose B.

Thoughts

This feels like one of the reasons why it's easier to be a negative person, or the fact that we remember our failures more clearly than our victories.