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Theory explained by Oreoluwa Akinnawo and written by Amos Tversky and Daniel Kahneman
Loss Aversion is a cognitive bias that deals with the tendency to prefer avoiding losses to acquiring equivalent gains, the pain of losing is psychologically twice as powerful as the pleasure of gaining. It describes why, for individuals, the loss felt from money, or any other valuable object, can feel worse than gaining that same thing.
In plain terms, people would take much greater risks to avoid losing $20 than they would gain $20 in the first place.
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