Concept · Cognitive Bias: Decision-making and judgment biases
Loss aversion
Origin: Kahneman & Tversky, 1979
The Biological Bridge
This business construct is human-invented, but the outcome it's trying to achieve has deep biological roots.
Surface Construct
Losses loom larger than equivalent gains (roughly 2:1)
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Underlying Outcome
NOT a bug - asymmetric risk weighting for survival
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Biological Mechanism
Asymmetric survival payoffs. In ancestral environments, losing your food cache meant death; gaining extra food meant marginal benefit (diminishing returns from surplus). The 2:1 ratio reflects actual survival mathematics: one bad loss kills you, while many small gains barely compound. Loss aversion is calibrated to ancestral stakes.
Key Insight: Loss aversion isn't irrational - it's miscalibrated for modern low-stakes decisions. The mechanism is correct; the environment changed.
The Full Picture
Territorial animals fight harder to defend existing territory than to acquire new ground—the asymmetry between gains and losses shapes every contest. A robin defending its territory will escalate to injury, while an intruder retreats at lower cost thresholds. Risk-sensitive foraging shows the same pattern: starving animals become risk-averse (protect remaining energy) while well-fed animals take risks (losses hurt more than equivalent gains help). Loss aversion is written into biology's firmware because asymmetric stakes demand asymmetric strategies.