We put more effort into avoiding losses than making gains

The discovery that we care more about losses than equivalent gains has been hugely influential in behavioural economics. The idea was introduced back in 1979, in a paper by Dan Kahneman and Amos Tversky. Since then, it’s been demonstrated in a huge range of settings, and led to some effective interventions for everything from sales teams to students. Take this finding from 2016: when students are given maximum grade points at the start of the semester and then lose points according to their performance in exams and assignments, they do better in the end than students who start with zero points and must work to accrue grade points instead. 

It’s often assumed that these interventions work because people choose to exert more effort to avoid losses than to make equivalent gains. But there has been only limited work to explore this, write Ana Farinha and Tiago Maia at the University of Lisbon, in their new paper in the Journal of Experimental Psychology: General. So the pair set out to investigate. They used an experimental set-up that focused not on task performance — as is generally the case in this field of research — but rather on how much effort participants opted to make to avoid losses or make gains. Continue reading →

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