How Loss Aversion is Driving Your Fear of Failure

And five tips to help you overcome this problematic evolutionary tendency.

Photo by Miroslav Jonas on Unsplash

You’re in luck — you get to play a game! You get to pick between two options.

• Option A: In this option, you are the 100,000th customer at a movie theater. At the ticket window, you are told that you have won $100.
• Option B: In this option, you wait in line at a different movie theater. The person in front of you wins $1,000 for being the millionth customer of this movie theater. You make a sad face at the ticket window and are rewarded with a $150 pity prize.

Which option do you prefer? Most of you will say A. If humans were rational, that would make zero sense.

But we’re not. We’re very irrational. And one of the best examples of our irrationality is loss aversion, a cognitive bias that represents a vibrant relic of our treacherous past.

What is Loss Aversion?

Loss aversion refers to the common tendency to prefer avoiding losses over acquiring equivalent gains. Put differently, most people would prefer not to have someone take $5 from them than to find $5 on the street. Some studies suggest losses are twice as psychologically powerful as gains. If that’s true, a typical…