I listened to a professor who was delivering perspectives on management studies. A very interesting idea that he explained was the idea of loss aversion.
This is directly connected to behavioural finance – the psychological pain of losing is about twice as powerful as the pleasure of gaining. If you put your experience on a graph, the pain of losing $100 is twice the pleasure you get gaining $100.
Daniel Kahneman who researched this received the Nobel Memorial Prize in 2002, and it’s a perspective that is widely used in marketing techniques used for products and services across the world. The offers we get, the rebates we get, how companies consciously play with the price of a product – all these are ultimately based on this specific psychological reality of humankind.
I feel truly interested in this perspective, and I’m sure when we understand the true essence of this perspective as a consumer our behaviour can also be altered and managed well whenever we buy something.
Today I am extending my gratitude to the professor who shared this perspective with me.
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