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Jan. 27th, 2007 06:53 pm![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
watertank Many decision problems take the form a choice between reaining the status quo and accepting an alternative to it, which is advantageous in some respects and disadvantageous in others. ... Because losses loom larger than gains, the decision maker will be biased in favor of retaining the status quo.
...the highest price that an individual will pay to acquire an asset will be smaller than the minimal compensation that would induce the same individual to give up that asset, once acquired. ibid. p. 13
In general, loss aversion favors stability over change. ...instability of preferences produces a preference for stability. In addition to favoring stability over change, the combination of adaptation and loss aversion provides limited protection against regret and envy by reducing the attractiveness of foregone alternatives and of others' endowments. p. 14.
...the highest price that an individual will pay to acquire an asset will be smaller than the minimal compensation that would induce the same individual to give up that asset, once acquired. ibid. p. 13
In general, loss aversion favors stability over change. ...instability of preferences produces a preference for stability. In addition to favoring stability over change, the combination of adaptation and loss aversion provides limited protection against regret and envy by reducing the attractiveness of foregone alternatives and of others' endowments. p. 14.
explains "government as bandits" theory ( see. Undercover Economist), i.e. people prefer stable bandit government, rather than "lawlessness". cf. situation in the Iraq and frmr Soviet Union.The preceding analysis implies that an individual's subjective state can be improved by framing negative outcomes as costs rather than as losses. p. 15.
