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Loss Aversion


What would you answer if you were asked this question: "How much would you want to gain from an investment to compensate you for a potential loss of R 100?" Put differently: "If there is a chance that investment X would cause you a loss of R 100, what would investment X's upside have to be for you to consider putting any of your money into it?" If you are like most people, the answer is around R 250.