Loss aversion is a phenomenon where people accept the value of the loss bigger than the gain. Here is an experiment on loss aversion carried out by a psychologist named Justin kruger.
The research targeted Illinois State University. Researchers asked students which one seems to have higher probability of choosing a correct answer between sticking to the first answer and changing the answer. 75% of students answered that the first answer would be the correct answer rather than the changed one. After analyzing the mid-term score of 1,500 students, on the other hand, 54% of the students who changed their first answer got the right answer. And only 19% of the students who did not change their first answer got the right answer.
Additionally, researchers also asked the students which one do they think is more regretable, between choosing the wrong answer after changing the first answer and choosing the wrong answer after sticking to their original answer. Most of the students answered that the former would me much more regretable. This is the good example of loss aversion. People tend to think the value of loss bigger than gain. …show more content…
It is a theory that a translation of certain questions can differ according to the way of proposing the question. The following experiment by a psychologist Daniel Kahneman, on framing effect, can show how it maximizes loss aversion.
USA is now confronted with a new type of plague spread by mosquitos. If neglected, it will claim the life of 600 people. The authorities prepared 2 plans, expecting the following results-
(1) If you follow plan A, you will be able to save 200 lives. But if you choose plan B, the probability of saving all 600 lives is 1/3, and that of none surviving, is
The research targeted Illinois State University. Researchers asked students which one seems to have higher probability of choosing a correct answer between sticking to the first answer and changing the answer. 75% of students answered that the first answer would be the correct answer rather than the changed one. After analyzing the mid-term score of 1,500 students, on the other hand, 54% of the students who changed their first answer got the right answer. And only 19% of the students who did not change their first answer got the right answer.
Additionally, researchers also asked the students which one do they think is more regretable, between choosing the wrong answer after changing the first answer and choosing the wrong answer after sticking to their original answer. Most of the students answered that the former would me much more regretable. This is the good example of loss aversion. People tend to think the value of loss bigger than gain. …show more content…
It is a theory that a translation of certain questions can differ according to the way of proposing the question. The following experiment by a psychologist Daniel Kahneman, on framing effect, can show how it maximizes loss aversion.
USA is now confronted with a new type of plague spread by mosquitos. If neglected, it will claim the life of 600 people. The authorities prepared 2 plans, expecting the following results-
(1) If you follow plan A, you will be able to save 200 lives. But if you choose plan B, the probability of saving all 600 lives is 1/3, and that of none surviving, is