The Human Mind
Businesses are built by people for people.
Understanding how we take in information,
how we make decisions, and how we decide
what to do or what not to do is critically important
if you want to create and sustain a successful business venture.
Loss Aversion
“Our doubts are traitors, and make us lose the good we oft might win, by fearing to attempt.” — William Shakespeare, Measure for Measure
Key Ideas:
- Loss Aversion means that people hate to lose things more than they like to gain them.
- Loss Aversion explains why threats usually take overcome opportunities when it comes to Motivation.
- Loss Aversion also explains why uncertainty appears risky. For example, starting a business involves the potential loss of a steady and predictable income, which stops people from getting started in the first place.
- The best way to overcome loss aversion is to Reinterpret the risk of loss as “no big deal.”
- This is why Risk Reversal is so important when presenting an offer: people hate to lose. Eliminate this perception of risk by offering guarantees, and you’ll increase your sales.
Questions for Consideration:
- Is Loss Aversion holding you back from making a decision that appears to include the potential of loss?
- Would that loss be devastating, or could you handle lit?