Understanding Loss Aversion: A practical Insight into Making Fear- Free Decisions

Hi Everyone!

 

I hope everything is going well for you!

 

I'm going to discuss a cool idea and a practical tip that we all encounter on a daily basis today: you may check your email right now! and assess oneself.

 

All right, what's this trick? Before I tell you about it, allow me to set the scene. When you were last at the grocery store or a supermarket, what caught your attention the most? No, I don't mean a particular product! Rethinkᅳthat is, offersᅳright!

 

The best thing about shopping, don't you think, is the deals? Why is it the case?

 

We are duped by these deals because they are temporary and only available during certain events and occasions.

 

and that what make us get fooled with these offers even if we don't need the product or service, but the fear of missing out the offer, and that is what our today's concept, "Loss-Aversion".

 

“loss aversion”, is the dis-utility of giving upon the object is greater than the utility associated with acquiring it. In other words, losses loom larger than gains.

  

 

In 2016, Seth Godin created a book with limited numbers of copies containing all of his blog posts. The book's cost was $400. by creating the feeling of scarcity, sales increased dramatically. This is a great example of the “Loss Aversion” effect that used in marketing & sales.

 

Other examples of marketing and sales tricks are sentences like "Limited time offer" or "this offer disappear at midnight" together with timer motivate customers to buy immediately.

 

Other possible good implication to this concept is when a HR department try to convince employees to participate in a developmental program, it can simply frame a scenario that let employees feel the losses they might experience compared to gains they might mislay.

If you checked your email now, specifically at the promotion corner or button, when you see and analyze the promotional emails, you will see these tricks applied extensively (like the timer and old big price compared to the offer (i.e., new) price to urge you to act now without thinking

 

So, the next time, you see an offer whether a product or service offer, you need to first check if you need it or no! before make a decision to save time, money, efforts and most importantly the remorse or deep regret and guilt for the wrong decision.

See you soon! 😀