So many business ideas that were never undertaken, so many books that were never written, a whole series of projects that do not see the light of day despite their great potential. And all this because of the fear of failure. This is precisely what the concept of so-called loss aversion is based on. A way of thinking that can have certain advantages for those with a more cautious mentality. But, at the same time, it is limiting to a certain point, because when you don't take risks you don't lose, but you don't win either.
The premise that constitutes this type of barriers that are part of the way of thinking of many people can be applied to different aspects of life. However, the concept of loss aversion itself is limited to the world of finance and business.
Loss aversion is the way in which the cognitive bias is known in Psychology that causes people to reject certain opportunities, because the fear of the risk of losing that they experience prevails over their desire to obtain a profit. This concept was studied in 1979 by psychologists Daniel Kahneman and Amos Tversky, who delved into how this affects the world of economics and business.
To explain this, one must take into account the emotional impact of a loss, which may have a more profound negative impact than the benefit that a gain can provide. And this spring that puts the brain on guard is especially sensitive in finance.
The human mind tends to prefer to keep what it already has than to risk being able to gain more, but with the danger of losing if it fails. In monetary terms, this is exemplified in a more than evident way. You just have to look at the enormous variety of events that are capable of affecting financial markets and causing them to fluctuate constantly. A measure that is intended to establish preventive protection against losses. Although that may mean completely ignoring certain opportunities that would be able to result in profit.
Although it is true that this cognitive bias can be useful to establish a type of strategy that ensures a certain situation as much as possible, it is also counterproductive. Sometimes the focus is so focused on not losing that other more advantageous options are wasted. Or that it even supposes a limiting effect that prevents contemplating new paths, or even embarking on commercial paths, which could bring many benefits if they were explored.
