Loss aversion can be described by which of the following?
A)the tendency to selling profitable investments too early.
B)the tendency to place more emphasis on losses than on gains.
C)the tendency to hold on to investments that are losing money for too long.
D)all of the above.

Question

Quizplus · Accepted Answer

Loss aversion refers to the psychological phenomenon where individuals tend to prefer avoiding losses to acquiring equivalent gains. This means they feel the pain of losing more intensely than the pleasure of gaining. This concept explains why people might sell profitable investments too early to lock in gains (avoiding the potential loss if the market turns), place more emphasis on losses than on gains, and hold on to losing investments for too long, hoping to avoid realizing a loss.

Loss Aversion Can Be Described by Which of the Following