Why losses distort decisions more than gains.
| Concept | Explanation | |---|---| | Loss aversion | Losses often feel more painful than equivalent gains feel rewarding. | | Disposition effect | Tendency to sell winners too early and hold losers too long. | | Sunk-cost thinking | Past purchase price influences a decision even when future prospects have changed. | | Break-even bias | Waiting to recover to the entry price rather than reassessing current evidence. | | Risk seeking after losses | Taking excessive risk to recover prior losses. |