Episode Details

Loss aversion, a core principle in behavioural economics, describes the tendency for individuals to feel the pain of a loss more acutely than the pleasure of an equivalent gain. This phenomenon, explored by Kahneman and Tversky in their Prospect Theory, influences decision-making across various contexts, from financial markets to consumer behaviour. The podcast highlights examples such as people holding onto losing investments, businesses framing discounts rather than surcharges, and the 'Save More Tomorrow' scheme, which utilises loss aversion to increase pension contributions.