2015-01-05

[public] 5.32M views, 361K likes, 2.59K dislikes audio only

Veritasium

How much would it take for you to risk $10?

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Psychological literature shows that we are more sensitive to small losses and than small gains, with most people valuing a loss around 1.5-2.5 times as much as a gain. This means that we often turn down reasonable opportunities for fear of the loss. However over the course of our lives we will be exposed to many risks and opportunities and this invariably means that taking every small reasonable bet will leave us better off than saying no to all of them.

NOTE: The video is not saying to accept every bet, only those with reasonable odds (preferably in your favour), and those which if you lose would not cause significant financial or other damage. In those cases it is wise to be loss averse!

Filmed by Adrian Tan

Thanks to Physics Girl for suggestions on previous versions of this video. https://www.youtube.com/physicswoman