Question

The tendency for people to dislike losing a particular amount more than they like gaining the same amount is called:

A. Satisficing
B. Prospect theory
C. Escalation of commitment
D. Anchoring bias

Answer 1

Loss aversion refers to the tendency for people to dislike losing a particular amount more than they like gaining the same amount. It has implications for investing, as people tend to react more strongly to losses than to gains in the stock market.

Step-by-step explanation:

The tendency for people to dislike losing a particular amount more than they like gaining the same amount is called loss aversion. Loss aversion refers to the fact that losing $1 pains us 2.25 times more than gaining $1 helps us, according to economists Daniel Kahneman and Amos Tversky. This bias has implications for investing, as people tend to react more strongly to losses than to gains in the stock market.