Question

if given the opportunity to bet on a coin flip that would pay them $100 if they are right and cost them $80 if they are wrong, most people take the bet because .

Answer 1

If given the opportunity to bet on a coin flip that would pay them $100 if they are right and cost them $80 if they are wrong, most people will not take the bet because losing $80 feels worse than winning $100.

Loss aversion is a psychological bias where the feeling of loss is deeper than the feeling of gain. The psychological effect of loss is double the effect in comparison to gain.

Loss aversion is a concept of cognitive psychology, behavioral economics, and decision theory. It is a common concept in daily life especially when a person makes a financial or marketing decision.

In this situation, people will less likely to take the bet as the loss aversion is stronger here as the loss will be $80 and the gain is marginally higher, $100.

Learn more about loss aversion here brainly.com/question/25018159

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