risk

Irrational Loss Aversion

room: Columbus GH — time: Wednesday 16:00-16:45
Level: Practicing

It is human nature to avoid loss. We make rational decisions to improve our situation and respond to circumstances. But are we always rational? Whether it be the tendency of people to hold stocks that have lost value or teams that continue a death march, this irrational fear of acknowledging a loss can cause people to keep investing in a poor undertaking. This discussion is a brief exploration of how our desire to avoid loss can cause us to irrationally make our situation worse in the hopes of somehow breaking even as well as some techniques to identify and avoid these situations.

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