Loss Aversion and Analysis Paralysis

The human brain tends to overestimate losses, valuing them twice as much as gains. When making decisions, the brain reduces the perceived reward by 50% and doubles the perceived loss. This phenomenon leads to analysis paralysis where the brain magnifies the cost of actions while diminishing the benefits. Studies show that potential losses have a greater impact on decision-making than potential gains, with individuals valuing losses more than gains by a factor of about two. This cognitive bias often manifests in situations where individuals worry excessively about negative outcomes, only to find that the actual experience is not as bad as anticipated, such as getting a shot where the momentary pain is far less than the fear built up in the mind.