Respuesta :
People who are loss averse prioritize averting losses over achieving profits. The discomfort of a loss is felt more keenly than the joy of an equivalent gain, according to behavioral scientists. Too-conservative portfolios may result from loss aversion.
How can loss aversion impact the value of stocks?
The investors will continue to cling on to the equities despite the fact that they have no future because of the loss aversion fallacy. The investors would perceive selling the equities at a loss as a loss to themselves. Because they believe that the prices will eventually rise again, they do not sell the stocks.
What negative effects might loss aversion have?
Major Takeaways. The finding that people react asymmetrically more negatively to losses than to similar benefits is known as loss aversion. The overpowering fear of losing money can lead investors to act impulsively and make poor choices, such as holding onto a stock for an excessively long or short period of time.
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