Loss Aversion and Behavioral Finance
NY Times Article on Kahneman
Behavioral Finance Tutorial (PDF)
Psychologist Daniel Kahneman recently won the Nobel Prize in Economic Science for his work in Behavioral Finance. He came up with the interesting notion of Loss Aversion, among other things, that suggests that we are much more concerned about losing things than we are about gaining things. While directly applicable to your buying and selling stocks, for instance, it also has applications throughout our lives. To what extent do you see yourself as Loss-Averse? How afraid are you of losing what you currently have?
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