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Placeholder Lesson:
** This lesson is generated with AI assistance and approved by Danny Nelson. This lesson will communicate the essence of the topic for now until Danny can create a full lesson. **
Loss aversion is the tendency to feel losses more strongly than equivalent gains.
People are generally more upset about losing $100 than they are happy about gaining $100.
Because of this, they may avoid risks even when the odds favor them.
It can cause investors to hold losing investments too long, hoping to avoid “realizing” a loss.
This bias often leads to overly cautious behavior and missed opportunities.