Loss Aversion (Behavioural Economics) | tutor2u Economics
Student videos

Loss Aversion (Behavioural Economics)

  • Levels: A Level, IB
  • Exam boards: AQA, Edexcel, OCR, IB, Eduqas, WJEC

The basic idea behind loss aversion is that people feel losses much more than gains. People do not treat gains and losses in a linear way!

Loss aversion is often seen in financial markets: Some evidence that stock market investors hold their investment positions with paper losses too long and sell their investment holding paper gains too early.

Loss aversion is often appealed to by businesses trying to sell funeral and airline insurance - they have developed pitches to consumers that appeal to the fear of financial loss and specifically the worry that they will not be able to afford to pay for the funeral of a loved one at a time of extreme grief. The pain of losses is greater than the pleasure of a similar gain.

Behavioural Economics - Loss Aversion

Let's hear about prospect theory and loss aversion from a Nobel prize winner in economics - Professor Robert Shiller.

Prospect Theory (Yale)

View our full playlist of revision videos on behavioural economics over on the Tutor2u Youtube Channel:

https://www.youtube.com/playli...

Subscribe to email updates from tutor2u Economics

Join 1000s of fellow Economics teachers and students all getting the tutor2u Economics team's latest resources and support delivered fresh in their inbox every morning.

You can also follow @tutor2uEconomics on Twitter, subscribe to our YouTube channel, or join our popular Facebook Groups.

Job board

Second in Business Studies and Economics

The Broxbourne School, Broxbourne, Hertfordshire

New

Related Collections

Teaching Vacancies

Recruitment

Advertise your vacancies with tutor2u

Much cheaper & more effective than TES or the Guardian. Reach the audience you really want to apply for your teaching vacancy by posting directly to our website and related social media audiences.

Find our more ›

Advertise your teaching jobs with tutor2u

A New Home for tutor2u Resources

We've just flicked the switch on moving all our digital resources to instant digital download - via our new subject stores.

For every subject you can now access each digital resource as soon as it is ordered. This will always be the latest edition of each resource too (and we'll update you automatically if there is an upgraded version to use).

Simply add the required resources to your cart, checkout using the usual options and your resources will be available to access immediately via your mytutor2u account.