People are less upset by one larger loss than several smaller losses, even though there may be no difference in the dollar value of the two situations.

Question

Quizplus · Accepted Answer

This phenomenon is known as the "less-is-better" effect or the "single loss aversion" effect. It is a cognitive bias where individuals place more emphasis on a single loss compared to the cumulative effect of multiple smaller losses, even if the overall monetary value is the same. This can lead to irrational decision-making, such as holding onto a losing investment to avoid the pain of realizing a single large loss, even if it means missing out on potential gains.

People Are Less Upset by One Larger Loss Than Several