Professor Meng Li | How Loss-averse Behaviour of Individuals Affects National Economic Systems

Apr 17, 2024 | business and economy

About this episode

Loss aversion is a concept in behavioural economics that refers to the tendency of people to strongly prefer avoiding losses rather than acquiring equivalent gains. Put simply, individuals often feel the negative emotions of losing something more intensely than the positive emotions of gaining it. For example, if someone is given £100 and loses £50, they are likely to feel much worse than if they had simply been given £50, despite an equal net gain. These behavioural patterns mean that people make very different decisions than traditional economic theories predict. Read More

Original Article Reference

Summary of the article ‘Loss aversion and inefficient general equilibrium over the business cycle’ in Economic Modelling,


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