So Much To Lose – Loss Aversion

Loss Aversion – “I like to win, but more than anything, I can’t stand this idea of losing. Because to me, losing means death.” – Lance Armstrong

In this week’s Success Newsletter, I would like to reveal the fear of loss, how that motivates & impacts our daily decision-making & paralyzes us, and how to overcome loss aversion.

First a quick update:

“Persuasion And Influence Secrets”
Do you want to learn the secrets to persuasion that they don’t want you to know, and before it is too late? There are 6 key secrets to persuasion and influence

“Teens’ Sexting Confuses Boys About Girls”
Teens are sexting and learning about sex and relationships by watching porn. While girls are becoming objectified and sexualized, the trend is damaging to boys and future relationships. Watch the video! https://youtu.be/65cpOXxEUrU

Now, let’s talk about the fear of loss, how that motivates & impacts our daily decision-making & paralyzes us, and how to overcome loss aversion.

“I like to win, but more than anything, I can’t stand this idea of losing. Because to me, losing means death.” – Lance Armstrong

Well, of course, no one likes to lose, do they?

However, Lance Armstrong’s words were revealing: he was willing to give up everything to avoid losing, and when he was finally exposed for cheating, he practically lost everything! 

Armstrong was also reflecting an extreme version of human motivation and behavior: losing has a much greater psychological impact on us than winning does.

In other words, we gain more pleasure out of not losing that we do out of winning; we prefer avoiding losses over making gains. In Lance Armstrong’s case, once he won the first Tour De France title, he feared losing the title to someone else more than he thought about winning.

How does this relate to you?

Losing $10 has a greater psychological impact on you than winning $10 does.

You will fight harder and longer when you’re confronting a loss than when you are focusing on a potential gain.

For example, psychologist Daniel Kahneman, who identified the aversion to loss theory, explains:

“In my classes, I say: ‘I’m going to toss a coin, and if it’s tails, you lose $10. How much would you have to gain on winning in order for this gamble to be acceptable to you?’

“People want more than $20 before it is acceptable. And now I’ve been doing the same thing with executives or very rich people, asking about tossing a coin and losing $10,000 if it’s tails. And they want $20,000 before they’ll take the gamble.”

The Loss Aversion Theory offered by psychologists Daniel Kahneman and Amos Tversky suggests that the desire to avoid losses is wired more strongly into the brain than the desire to achieve gains.

This cognitive bias is designed to maximize opportunities and minimize threats: the loss of precious resources is a potential threat to survival, and so humans are hardwired to hold on to what they have. It is another way to ensure humans stay safe & secure.

This bias also explains why so many of us make the same irrational decisions over and over, in every area of our life; it is the neuropsychological explanation for attachment. Read “Attachment, Greed & Desire” 

In fact, studies reveal that people place higher value on a good that they own than on an identical good that they do not own, and, people feel losses more deeply than gains of the same value.

Let’s look at a few basic applications of the loss aversion theory (note that failure is often also equated with losing):

  • You are in a marriage or relationship that simply isn’t working and yet you refuse to let go – you fear losing the marriage or failing
  • You have made an investment and it is making no returns and yet you won’t sell – you fear losing the investment or failing
  • You are in a job with a title or good position and you are miserable and yet you stay there (excluding obvious financial restraints which make leaving more difficult) – you fear losing the job & title
  • You have a friend who continually lets you down and yet you won’t let him/her go – you fear losing the friendship
  • You have a wardrobe of clothes which you haven’t worn in years, and yet you won’t give them away – you fear losing the clothes
  • You are in the cinema (or you have purchased an online movie) and you are watching the movie and after 20 minutes you realize it is awful and yet, you refuse to get up and leave or stop watching the movie online – you fear losing the money you paid for the movie
  • You have made a small bet at a casino and you lost and yet you will continue to making more bets – you fear losing the money from the first bet permanently as well as having failed, and so you keep trying to win back the original amount
  • You purchased a product with a trial period (free for 14 days) and you realize you don’t really need it and yet you refuse to return it or request a refund – you fear losing the product

What do all of these examples have in common?

You have become attached to the object (tangible or intangible); you have given it value (because you own it, have invested in it or have given something for it) and you believe that ‘losing’ it or giving it up would bring more pain than the pleasure of letting it go to replace it with something better.

Again, this is the loss aversion bias:
We rationally recognize and identify that the ‘valuable’ possession is causing us pain. However, we simultaneously believe that there will be more pain letting go of it than keeping it.

Put another way, most people will respond positively to the advertising offer of buying a product to avoid a surcharge of $20 versus buying the same product that is offered at a discount of $20. Why?

Again, the loss version bias pushes us to fear the loss of $20 more than be motivated by the offer of gaining $20 – even though they are ultimately the same thing – we save $20 buying either product,

Pitfalls

  • Comfort zone
  • Possessiveness
  • Attachment

Solution

  • Keep expanding your comfort zone) regularly do new things with new people in new places & settings; walk or drive a new route. (Make a goal of doing something new each week – even if it is something small.)
  • Surround yourself with people who are adventurous and take risks
  • Notice when you are feeling possessive towards something or someone; when you do that, you no longer own it, it owns you! Instead, take action to let it go or to give that person more space and freedom.
  • Notice when you are giving too much meaning to something (i.e. giving it extraordinary value.) That something could be a possession, object, job, friendship, etc. When you become attached to something, you lose power and control over yourself and you keep looking back in the rear view mirror, staying stuck in the past and afraid of losing something versus looking forward to where you are heading.
  • Do Spring cleanings each season; give stuff away (or sell it) and ask a friend to commit you to doing it (give him/her $100 and ask them to give it back to you once you have finished your cleaning.)
  • Focus on winning instead of the fear of failure; focus constantly on the pleasure of winning imagining that you already possess the win (the cognitive shift of visualizing the win to be yours will trick your brain in motivating you to push harder to achieve it.)

Finally, remind yourself constantly that no matter what happens or what you have or don’t have or who you are with or not with, you will be okay!

If you need assistance to overcome fears and attachments, book a one-on-one session with me. 

You can add to the conversation below.

If this newsletter was forwarded to you and would like to receive all of my newsletters please enter your email address on the home page at PatrickWanis.com.

I wish you the best and remind you “Believe in yourself -You deserve the best!”

Patrick Wanis Ph.D.
Celebrity Life Coach, Human Behavior & Relationship Expert & SRTT Therapist
www.patrickwanis.com

Facebook Comments

Comments

comments

1 reply

Comments are closed.