PHL145H5 Lecture Notes - Lecture 18: Status Quo Bias, Loss Aversion, Apple Community
Document Summary
Overview: in this chapter we study several more biases and tendencies to flawed thinking and consider ways to avoid them. Alternatives are described can make the change between which one sounds better. These differences in wording are said to frame the issue in different ways. Farming effects occur when the way we word or conceptualize alternatives influences which alternative people prefer. We prefer a certain gain rather than a 50/50 to a greater gain. By contrast, people tend to be risk seekers, when it comes to losses. Most of us prefer the risk of a large loss to a certain loss that is smaller. When asked to pick 1 of 2 items they look at the better features. When asked to reject 1 of 2 items they look at the negative features. Loss aversion: a loss of a given size seems bigger than a gain of the same size.
