Annie Duke • Thinking in Bets: Making Smarter Decisions When You Don't Have All the Facts

Understand the principle of  loss aversion : We tend to fear losses more than we desire gains. Keep it in mind when considering different options and risks.  Sometimes the most dangerous thing you can do is play it safe

the €100,000 offer, but at least you won't leave empty-handed. The upshot of all this is that you badly miscalculate the risk. You keep on chasing after the possibility of a big gain because you can't accept the prospect of a loss. Your emotions have sabotaged common sense. Loss aversion is an innate flaw. Everyone who experiences emotion is vulner

The way we field outcomes is path dependent. It doesn’t so much matter where we end up as how we got there. What has happened in the recent past drives our emotional response much more than how we are doing overall. That’s how we can win $100 and be sad, and lose $100 and be happy. The zoom lens doesn’t just magnify, it distorts.

If the fear of betting on the wrong idea is twice as powerful as the pleasure of betting on the right idea, then we can’t neutralize the fear of losing with the pleasure of winning. We can only neutralize the fear of losing with…the fear of losing.

One of the key underpinnings of Kahneman’s contribution is what scientists call “loss aversion,” which suggests that, psychologically, the pain of losing is twice as powerful as the pleasure of gaining. Kahneman points out that most people will “reject a gamble in which they might lose $20, unless they are offered more than $40 if they win.”5