It turns out that loss aversion does exist, but only for large losses. This makes sense. We *should* be particularly wary of decisions that can wipe us out. That’s not a so-called “cognitive bias”. It’s not irrational. In fact, it’s completely sensical. If a decision can destroy you and/or your family, it’s sane to be cautious.
It sounds like much of loss aversion is just an intuitive use of the Kelly Criterion?
It sounds like much of loss aversion is just an intuitive use of the Kelly Criterion?