The downfall of Lance Armstrong

By  via http://www.nytimes.com   Article

Overcoming an Aversion to Loss

“We’ve all heard (probably too much) about the downfall of Lance Armstrong. If you’ve followed his career at all, you know how committed this guy was to winning. Last week, I happened to see the trailer for the documentary “The Armstrong Lie.” It opens with a close-up shot of Armstrong’s chiseled face staring intently into the camera and explaining what drives him:

“I like to win, but more than anything, I can’t stand this idea of losing. Because to me, losing means death.”

It played out that way. Armstrong decided that avoiding the pain of losing was worth any cost. Now, it seems as if it could very well cost him everything.

Turns out that most of us don’t like losing. In fact, it’s what the academics call loss aversion. We feel the pain of loss more acutely than we feel the pleasure of gain. In other words, we may like to win, but we hate to lose.

The psychologists Daniel Kahneman and Amos Tversky showed that even something as simple as a coin toss demonstrates our aversion to loss. In a recent interviews, Mr. Kahneman shared the usual response he gets to his offer of a coin toss:

“In my classes, I say: ‘I’m going to toss a coin, and if it’s tails, you lose $10. How much would you have to gain on winning in order for this gamble to be acceptable to you?’

“People want more than $20 before it is acceptable. And now I’ve been doing the same thing with executives or very rich people, asking about tossing a coin and losing $10,000 if it’s tails. And they want $20,000 before they’ll take the gamble.”

In other words, we’re willing to leave a lot of money on the table to avoid the possibility of losing.”

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