6min chapter

Many Happy Returns cover image

Are Investors Rational? Lessons From the Late Daniel Kahneman

Many Happy Returns

CHAPTER

Understanding Loss Aversion and Risk Perception in Investing

Exploring how prospect theory and loss aversion influence individuals' investment decisions and risk perceptions, emphasizing the fear of losses over gains. The chapter compares recoverable and unrecoverable losses in various investment scenarios and highlights cognitive biases that lead to overvaluing risky investments.

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