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Psychology

Loss aversion

Overview

Loss aversion is the tendency to feel a loss about twice as heavily as a gain of the same amount of money. It's a concept that Daniel Kahneman and Amos Tversky proposed in their 1979 prospect theory.

The sadness of dropping 10,000 yen is bigger than the joy of finding 10,000 yen. You can probably grasp this intuitively. Loss aversion can affect not just economic behavior but everyday judgments too.

Question boxes and loss aversion

Loss aversion shows up in some situations when you run a question box too. When the person answering decides whether to answer a question, they may weigh the loss of "getting criticized for a weird answer" more heavily than the gain of "getting praised for a good answer." As a result, they tend to retreat into safe answers.

Take the fear of losing followers as an example. Some people feel the sadness of losing 5 existing followers more strongly than the joy of gaining 10 new ones. As a result, they could end up avoiding answers that might cost them followers and also holding back on answers that might win them new ones.

Getting past loss aversion

It's hard to overcome loss aversion completely, but knowing it exists gives you a chance to rethink your decisions. The habit of asking yourself, "Am I about to make the safe choice right now because I'm afraid of losing something?" also helps.

In a question box, it helps to think concretely about what the worst case is. Say you give a bold answer and get criticized. What would actually happen? You might lose a few followers. But some people might also relate to that answer. Loss aversion is a bias that overrates losses and underrates gains. Calmly weigh both sides, and then decide how far to go.

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