$100 is on the table, and you have a choice. You can choose to receive $50 or flip a coin. If you choose the coin toss and get heads, you get $100. If it’s tails, you get nothing. What do you do? If you’re like most folks, you’re probably going to take the $50. It’s a sure thing.
Now, what if this were a game of losses? What if you stood to lose $50 out of the gate? And what if the coin toss meant losing $100 with heads or losing nothing with tails?
What would you do then? Here, most folks choose to flip the coin. And even though they’re making a different decision — flipping the coin and taking the risk, instead of going with the known option — their reasoning hasn’t really changed. In both cases, the choice is largely based on fear, the fear of losses.
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