As complex as gravity and electricity are, the underlying principles are simple. Same with loss aversion. Money isn't the only or biggest motivator.
Take a good common example of loss aversion - admitting being wrong. Why do people find it difficult to admit that they are wrong?
What's at stake here? Reputation, respect, pride, even money.
100 scientists vs Einstein is a classic example of this. Pointless wars have been been fought because someone wouldn't admit being wrong. The Iraqi, Vietnam wars are good examples.
Your reaction to this issue is another.
Limiting loss aversion to just economic behavior betrays lack of understanding of the topic.
The arguments you made don't challenge what the article says one bit.
The loss aversion hypothesis is the hypothesis that given the choice between either of the following two scenarios:
- Having an object x and then risk losing it.
- Being offered an object x but risk not getting it.
people are more "motivated" by the first than by the second. The claim moreover is that:
- This is a universal motivator, which means it must explain "economic behavior" (which you mention) as well as anything
else. The fact that -- as the article says -- people prefer *keeping* a stock which is just as likely to lose in value as
to gain, is a *perfect* example to illustrate that it is *not* a universal motivator.
- That it is not rational. There are cases where losing something, like for instance money, is *truly* more damaging
than gaining the equivalent amount of money. For example, if I lost $100,000 it would be much more devastating than if I
gained $100,000 -- in this scenario, it's not a psychological *bias* but in fact a completely rational belief. This example
is in the article. You can not use examples like this one to argue in favour of "loss aversion", because there would be no
evidence of an irrational bias.
Also, the fact that you keep applying the "loss aversion" hypothesis as broadly as possible, to things like wars and arguments, suggests you're assuming it applies everywhere. What about the stock example, which is mentioned in the article? That ought to prove you wrong, no?
Take a good common example of loss aversion - admitting being wrong. Why do people find it difficult to admit that they are wrong?
What's at stake here? Reputation, respect, pride, even money.
100 scientists vs Einstein is a classic example of this. Pointless wars have been been fought because someone wouldn't admit being wrong. The Iraqi, Vietnam wars are good examples.
Your reaction to this issue is another.
Limiting loss aversion to just economic behavior betrays lack of understanding of the topic.