Which bias describes the tendency to avoid losses more strongly than seeking equivalent gains?

Which bias describes the tendency to avoid losses more strongly than seeking equivalent gains?

• A. Sunk cost
• B. Loss aversion
• C. Commitment bias
• D. Status quo bias

Answer: (B)

Loss aversion describes the tendency to avoid losses more strongly than pursuing equivalent gains. In everyday choices, the pain of losing something feels stronger than the pleasure of gaining the same amount, so people weigh potential losses more heavily than potential gains. This leads to behaviors like preferring a sure, smaller gain over a gamble with a higher possible gain, and, in losses, sometimes taking risks to avoid a certain loss. The idea comes from how outcomes are evaluated relative to a reference point, with the value of losses increasing more steeply than the value of gains. While others biases involve different patterns—sunk costs keep you tied to past investments, commitment bias pushes you to act consistently with what you’ve said or done, and status quo bias favors keeping things the same—the specific tendency described here is loss aversion.

Loss aversion describes the tendency to avoid losses more strongly than pursuing equivalent gains. In everyday choices, the pain of losing something feels stronger than the pleasure of gaining the same amount, so people weigh potential losses more heavily than potential gains. This leads to behaviors like preferring a sure, smaller gain over a gamble with a higher possible gain, and, in losses, sometimes taking risks to avoid a certain loss. The idea comes from how outcomes are evaluated relative to a reference point, with the value of losses increasing more steeply than the value of gains. While others biases involve different patterns—sunk costs keep you tied to past investments, commitment bias pushes you to act consistently with what you’ve said or done, and status quo bias favors keeping things the same—the specific tendency described here is loss aversion.