Elnaz Basirian

Jun 27, 2024 | hbr.org | Vijay Govindarajan |Shivaram Rajgopal |Anup K. Srivastava |Aneel Iqbal |Elnaz Basirian

In 1979, psychologists Daniel Kahneman and Amos Tversky famously posited that losses loom larger than gains in human decision-making. For example, a dollar of loss affects our behavior more than a dollar of profits. Likewise, when a firm announces losses, its stock price declines more dramatically than it increases for the same dollar amount of profits.