by Xavier Cirera and William Francis Maloney · 14 Jun 2017 · 373pp · 109,964 words
Daniel Kahneman has shown—the principal allure of the old is that it requires no deliberation and has some intuitive plausibility as a solution already. Loss aversion—people’s tendency to want to avoid loss—is twice as powerful psychologically as the allure of gains, as first demonstrated by Kahneman and Amos
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; lack of infrastructural and institutional competency and, 183–84; lack of skill and, 50; lack of time and, 51; lack of wealth and, 50–51; loss aversion and, 55; market-creating innovations and, 30, 35, 50–68; mattresses in Cambodia, 286; MicroEnsure insurances, 46–47, 56–59, 66; MoringaConnect in Ghana, 296
by Peter H. Diamandis and Steven Kotler · 13 Apr 2026 · 225pp · 76,418 words
the apocalypse is nigh when our inbox is full. Confirmation bias entrenches existing beliefs. Status quo bias makes us resistant to change. Both conspire with loss aversion to favor the familiar over the novel. Then recency bias compounds these issues, causing us to overemphasize current events while underestimating long-term patterns. Like
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curiosity and drives creativity, and momentum builds from there. The Abundance Mindset Our brains evolved in a world of scarcity. They default to threat detection, loss aversion, and zero-sum thinking. But those instincts can misfire in a world of abundance. An abundance mindset replaces fear with possibility. It stops us from
by William A. Birdthistle · 15 May 2016 · 375pp · 106,189 words
, Mar. 28, 2013, at B1. 9.See id. 10.Christian Ehm Sebastian Müller, & Martin Weber, When Risk and Return Are Not Enough: The Role of Loss Aversion in Private Investors’ Choice of Mutual Fund Fee Structures, June 17, 2014, Social Science Research Network, at http://ssrn.com/abstract=2252646. 11.See the
by Michael Bhaskar · 2 Nov 2021
older we get, the less risk the economy can bear. In general, one would expect an older society to be less dynamic, more risk- and loss-averse. Others see the role of competition, market barriers or access to capital as having the same effect. The capital required to unseat incumbents, whose market
by Andrea L. Glenn and Adrian Raine · 7 Mar 2014
with conduct problems and callous-unemotional traits.” Brain 132:843–52. De Martino, B., C. F. Camerer, and R. Adolphs. 2010. “Amygdala damage eliminates monetary loss aversion.” Proceedings of the National Academy of Sciences USA 107 (8):3788–92. de Oliveira-Souza, R., R. D. Hare, I. E. Bramati, G. J. Garrido
by Aaron Dignan · 1 Feb 2019 · 309pp · 81,975 words
/papers/w10486.pdf. We prefer to stick with what we’ve got: Daniel Kahneman, Jack L. Knetsch, and Richard H. Thaler, “Anomalies: The Endowment Effect, Loss Aversion, and Status Quo Bias,” Journal of Economic Perspectives 5, no. 1 (1991), doi:10.1257/jep.5.1.193. “put a man on the moon
by Kevin Dutton · 3 Feb 2011 · 338pp · 100,477 words
stock-market decline – despite the fact that the latter, over time, have shown far better rates of return. Such conundrums as this – known as myopic loss aversion – have provided the impetus for a new, and somewhat timely, field of study: neuroeconomics. Neuroeconomics focuses on the mental processes that drive financial decision-making
by Antti Ilmanen · 24 Feb 2022
to meeting this challenge is the prospect theory by Kahneman-Tversky (1979), which encompasses many features: preferences on gains and losses – thus implying narrow framing; loss aversion (moderated by diminishing sensitivity to gains or losses); and overweighting low-probability events. These features have been studied separately in many papers, while the broadest
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state three key areas: Biased beliefs (related to extrapolation, overconfidence, availability heuristic, anchoring, conservatism, confirmation bias, hindsight, etc.) Non-standard preferences (within the prospect theory: loss aversion (part of narrow framing) and simultaneous insurance and lottery preferences (part of probability weighting); elsewhere leverage aversion, regret aversion, ambiguity aversion, home bias, impact of
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chance is not the only behavioral bias investors must address.3 There is also the powerful combination of myopia (focus on the short term) and loss aversion (losses loom larger than gains) that has been proposed as one explanation for the “equity premium puzzle”4 and also applies more broadly to investor
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diversifying investments. Such investments are likely to sometimes stand out and invite proposals for deallocation – leaving the portfolio worse off.8 Separately, as noted, myopic loss aversion undermines a long investment horizon. Thus, reviewing performance less frequently helps reduce impatience. Boards that can take a long-term view are better able to
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as to narrow framing. The prospect theory of Kahneman-Tversky (1979) combines many features of common behavior in decision-making situations. The best-known feature, loss aversion (“losses loom larger than gains”), may not have as big investment implications6 as narrow framing and probability weighting: Narrow framing is related to line-item
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habit we could correct or more predatorily as a potential opportunity to benefit from others' mistakes. 6 Standard risk aversion has many similar consequences as loss aversion. Key differences include a kink at the origin (asymmetry between gains and losses) and potential risk-seeking behavior in the domain of losses (called “get
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–1094. Ben Dor, Arik: Albert Desclee: Lev Dynkin: Jay Hyman; Simon Polbennikov (2021), Systematic Investing in Credit, Wiley. Benartzi, Shlomol and Richard Thaler (1995), “Myopic loss aversion and the equity premium puzzle,” Quarterly Journal of Economics 110(1), 73–92. Berg, Florian; Julian Kölbel; and Roberto Rigobon (2020), “Aggregate confusion: The divergence
by Steven Pinker · 24 Sep 2012 · 1,351pp · 385,579 words
and his resolve toughens. His motto would be: “We fight on so that our boys shall not have died in vain.” This mindset, known as loss aversion, the sunk-cost fallacy, and throwing good money after bad, is patently irrational, but it is surprisingly pervasive in human decision-making.65 People stay
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’m not so weak, stupid, or indecisive that I can be easily talked out of it.” In a contest of resolve like an attrition game, loss aversion could serve as a costly and hence credible signal that the contestant is not about to concede, preempting his opponent’s strategy of outlasting him
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the mechanism at work. Many of the bloodiest wars in history owe their destructiveness to leaders on one or both sides pursuing a blatantly irrational loss-aversion strategy. Hitler fought the last months of World War II with a maniacal fury well past the point when defeat was all but certain, as
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-organized criticality and war sizes: Cederman, 2003; Roberts & Turcotte, 1998. 64. War of Attrition game: Maynard Smith, 1982, 1988; see also Dawkins, 1976/1989. 65. Loss aversion: Kahneman & Renshon, 2007; Kahneman & Tversky, 1979, 1984; Tversky & Kahneman, 1981. Sunk costs in nature: Dawkins & Brockmann, 1980. 66. More lethal wars last longer: Richardson, 1960
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Cochran, Gregory Cockburn, J. S. code of the streets; see also honor cognitive dissonance cognitive illusions, xxiii; see also availability heuristic; cluster illusion; conjunction fallacy; loss aversion; overconfidence; positive illusions; sunk-cost fallacy Cohen, Dov Cohen, Jonathan Cold War end of interstate wars in Europe mutually assured destruction proxy wars superpower confrontations
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disarmament great power wars and Humanitarian Revolution introduction of concept Kantian Peace Liberal Peace nuclear peace numbers related to violence in 20th century Lorenz, Konrad loss aversion Lott, Trent Luard, Evan Luria, Alexander Luther, Martin macabre voyeurism Macaulay, Thomas McCauley, Clark McClure, Samuel McCormack, Mary Ellen McCullough, Michael MacDonald, Heather Mack, Andrew
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, Murray Stravinsky, Igor Straw, Margaret Stroop task Sturm und Drang movement Sudan Suedfeld, Peter Sugiyama, Lawrence suicide terrorism Suk, Jeannie sunk-cost fallacy; see also loss aversion Sunstein, Cass superrationality suttee Suttner, Bertha von Sutton, Willie Swift, Jonathan Switzerland Symbionese Liberation Army (SLA) Symons, Donald sympathy; see also empathy sympathy-altruism hypothesis
by Sebastien Page · 4 Nov 2020 · 367pp · 97,136 words
return – risk aversion × volatility + skewness aversion × skewness – kurtosis aversion × kurtosis Note the positive sign for skewness, as positive skewness is preferable to negative skewness for loss-averse investors. The effect of this modification to mean-variance optimization is generally the same as for the other modified approaches: assets with undesirable downside risk
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