Michael could gamble four quarters in a carnival game, with the potential to win as many as 20 quarters. However, the possibility that he might end up with no quarters at all leads Michael to choose not to play. Michael's decision illustrates .
Michael could gamble four quarters in a carnival game, with the potential to win as many as 20 quarters. However, the possibility that he might end up with no quarters at all leads Michael to choose not to play. Michael's decision illustrates .
loss aversion
Explanation:
In cognitive psychology or behavioural economics or decision theory, loss aversion refers to the tendency of people to prefer not to lose something than to gain the equivalent amount if that thing. For example : it is better to not lose $100 than to find $100. Losses are felt more than gains are felt. in other words we gain a small utility when we actually gain compared to how the loss we feel when we actually lose. It is a very important principle in the domain of economics.
Loss aversion
Explanation:
Most of the time many people are possessive to their things. They do not want to lose it. They feel very anxious if they lose those things. It can be said that if a person has more then the person is more vulnerable to those things. Emotion regulation is the procedure that reduces the loss aversion and helps the people to come to the biased decision illustration. People always afraid to lose things that are under their possession. The version to loss things is the strong emotion of peoples. The aversion to loss displays critical negative outcomes in the form of emotions such as fear, anxiety, etc.
Thus here in the above statement Michael behavior in gambling to win 20 quartets but if lose, lose all quarters. So that he refused to play that illustrates the decision of Michael related to lose aversion.