Achieving our goals often involves choosing between competing priorities. When we decide to give something up, how do we deal with the feelings of discomfort this can cause?
Have you ever held onto an item of clothing that no longer fits, or a bond that’s fallen in value? You know you’d like to have more space in your wardrobe or a better investment, but somehow the pain of losing what you have, even if it’s not useful, seems to outweigh the clear benefits. This is what psychologists call loss aversion.
The endowment effect
In 1990, economist Richard Thaler joined psychologist Daniel Kahneman and behavioral economist Jack L. Knetsch in an ...