Loss Aversion Bias

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Description of Loss Aversion Bias. Explanation.

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Definition Loss Aversion Bias. Description.

Loss Aversion Bias is the human tendency to prefer avoiding losses above acquiring gains. Loss aversion was first convincingly demonstrated by Amos Tversky and Daniel Kahneman.

This form of Cognitive Bias may lead managers to risk aversion when they evaluate a possible business proposition; people prefer avoiding losses to making gains. It is a human tendency that is particularly relevant for risk managers, professional valuators and decision makers in general.

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End of description Loss Aversion Bias. An explanation.