Which of the following is an example of loss aversion? Believing that your house is worth more than it is because you own it Selling your house at a loss to find a better investment opportunity Only looking at sources that reinforce a higher selling value for your home Deciding against selling your house below what you purchased it for

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Which of the following is an example of loss aversion? Believing that your house is worth more than it is because you own it Selling your house at a loss to find a better investment opportunity Only looking at sources that reinforce a higher selling value for your home Deciding against selling your house below what you purchased it for

Answer 1

## Step 1Loss aversion is a concept in behavioral economics that describes the tendency of individuals to prefer avoiding losses rather than acquiring equivalent gains. This means that people are more likely to take risks to avoid losses than to achieve gains.## Step 2In the given options, we need to identify which one best represents this concept. ## Step 3Option D, "Deciding against selling your house below what you purchased it for", is a clear example of loss aversion. This is because the individual is choosing to avoid a potential loss (the difference between the purchase price and the selling price) rather than taking a risk to achieve a gain (selling the house for a higher price).

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