Showing posts with label Loss Aversion. Show all posts
Showing posts with label Loss Aversion. Show all posts

Tuesday, September 14, 2010

Futures Gain

Low and behold class III Milk futures gains big today. January - June 2011 gained $0.12.

Futures are commonly called "risk management" but, what really makes futures tick, making money for those in the middle, is really what is known as "loss aversion." See:http://en.wikipedia.org/wiki/Loss_aversion

"In economics and decision theory, loss aversion refers to people's tendency to strongly prefer avoiding losses to acquiring gains. Some studies suggest that losses are twice as powerful, psychologically, as gains."

Actually, humans seemed "hard wired" to do dumb, stupid things when contemplating a loss.

See: http://www.ted.com/talks/laurie_santos.html