Loss aversion

Loss aversion — the most replicated finding in behavioral economics: losses hurt roughly twice as much as equivalent gains please. It’s why a −30% feels like catastrophe when the spreadsheet says it’s a normal per-decade event (lesson 1.8: equities do −30–50% as scheduled maintenance), and why “just stop the bleeding” tempts you to convert a paper drawdown into a permanent one. It cannot be reasoned away in real time — only pre-empted by IPS trigger rules written while it’s dormant.

First used in: 2.8 · Behavior under fire