Disposition effect

Biological Parallel

Animals defend losing territories longer than optimal because abandonment signals permanent loss, while persistence maintains optionality. A wolf pack holds a depleted territory hoping for prey return; leaving erases their investment and territorial knowledge. Selling stocks at a loss triggers identical psychology: it converts paper loss into irreversible reality. The disposition effect isn't irrational—it's the ancient logic that persistence sometimes allows bad situations to reverse, while quitting makes them permanent.