According to Prospect Theory, humans have an enormous aversion to loss.6 We fear and avoid loss far more than we seek gain. Loss aversion primarily manifests itself in three specific forms—1) continuing to invest in something unprofitable simply because you’ve already invested in it (i.e., sunk cost bias),7,8 2) overvaluing something you own, believe, or have created simply because it’s yours (i.e., endowment effect),9,10,11 and 3) continuing to do something you’ve previously done in order to be viewed by yourself and others as consistent (i.e., consistency principle).12,13,14
