A Way to Be Wrong Called Loss Aversion

By July 20, 2017August 11th, 2017Blog, Ways to be wrong

The hunter makes a hole in a coconut. Bigger than Monkey’s hand, smaller than Monkey’s fist. The hunter fills the coconut halfway with rice—Monkey’s favorite food—and stakes it tight to the ground. Monkey happens by, reaches into the coconut, and grabs a fistful of rice.

Now Monkey is stuck. Now the hunter returns. Will Monkey drop the rice and escape? Maybe not. Maybe Monkey wants rice too much. Monkey is in danger of dying from loss aversion. She bears risk of capture to avoid the pain of losing a fistful of rice. She is caught by her thinking before she is caught by the hunter.


Loss Aversion. Evolution designed your brain for survival, not self-awareness. GumptionadeDan and Amos both want to see their Jumbos play the Bombers—bitter rivals—tonight. They both live in the same suburb, about an hour’s drive from the Fudge Forum, home of the Jumbos. Dan bought his ninety-five- dollar ticket to the game this morning. Amos bought his a few months ago. It starts to snow around 4:00 p.m. It is soon obvious there will be dangerous weather tonight. The Jumbos and the Bombers will play the game, but Dan and Amos face the disappointment of missing it.

Which of them is more likely to risk the drive? That is to say, which of them is more likely to be wrong? Having bought his ticket this morning, Dan will chase his ninety-five dollars through a blizzard, notwithstanding the fact that on any other weeknight, ninety-five dollars would not be enough to get him to drive all the way downtown and back in a light drizzle.

Dan fails to stop and ask himself two simple questions: “Would I drive through a blizzard if I had been given this ticket?” He would not. “Then why would I do it now?” After all, a ticket is a ticket, regardless of where it came from. That is so logical. People are so psycho-logical.

Dan starts toward downtown and ends up being dropped off at home at 4:00 a.m. by the state police, his car abandoned on the highway, not having gotten within ten miles of the game.

The force of loss aversion made Dan’s imagined pain of regret loom large in his unconscious mind. He accepted great risk to avoid this loss. Wrongness. Where was his common sense? Where was his gumption? Where, Monkey, where?


In December 1965, Frankie Valli and the Four Seasons reached number three on the Billboard chart with “Let’s Hang On (To What We’ve Got).” This is a cry that originates deep in the human unconscious. Loss aversion was—and is—a subset of death aversion.

To stay alive, Your Hairy Ancestor had to survive the process of getting food and shelter. Loss of food threatened death by starvation. Loss of shelter threatened death by exposure. Movement invited attack by other survivors, including saber-toothed tigers and fellow proto-humans. Replacing lost necessities was uncertain at best and fatal at worst.

The threat of loss received a more powerful response than the opportunity for gain among those individuals who survived long enough to be your ancestor. Reference points laid down a million years ago influence your intuitive response to modern threats, including threats that are more symbolic than actual.

Such as the loss of a ninety-five- dollar Jumbos ticket. Not a life or death matter, but you would think so by what happened. Why don’t you have more common sense? Why can’t you tell the difference between real and symbolic threats? Why this wrongness?

Because, as Leonard Mlodinow neatly put it, evolution designed your brain for survival, not self-awareness.


Learn more about ways to be wrong to get yourself on the path to being right more often.


[i] “Monkey is in danger...” - Robert Pirsig, Zen and the Art of Motorcycle Maintenance (New York: William Morrow & Company, 1974),303.

[ii] Which of them is more likely to risk the drive? [Chasing Losses]. Daniel Kahneman, Thinking Fast and Slow (New York: Farrar, Straus & Giroux, 2011), 343.

[iii] …evolution designed your brain

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