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Why you don’t make reasonable bets

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ST. LOUIS, MO (KTVI) – How much would you risk for $10?  That is the question a science blog poses to unsuspecting people on the street.  Many people miss out on making a good bet because of fears of losing what they have.

The YouTube description states: “Psychological literature shows that we are more sensitive to small losses and than small gains, with most people valuing a loss around 1.5-2.5 times as much as a gain. This means that we often turn down reasonable opportunities for fear of the loss. However over the course of our lives we will be exposed to many risks and opportunities and this invariably means that taking every small reasonable bet will leave us better off than saying no to all of them.

NOTE: The video is not saying to accept every bet, only those with reasonable odds (preferably in your favor), and those which if you lose would not cause significant financial or other damage. In those cases it is wise to be loss averse!”