Insights

Whey we don't like to lose money

Posted by Timothy

on Mon 02/08/2010 5:35 PM

Related Media

this will be replaced by the SWF.

People are afraid to lose money and an unusual study released on Monday explains why -- the brain's fear center controls the response to a gamble says Reuters.

The study of two women with brain lesions that made them unafraid to lose on a gamble showed the amygdala, the brain's fear center, activates at the very thought of losing money.

The finding, reported in the Proceedings of the National Academy of Sciences, offers insight into economic behavior and suggests that humans evolved to be cautious about the prospects of losing food or other valued possessions.

Benedetto De Martinoa of the California Institute of Technology in Pasadena and University College of London and colleagues were studying why people will turn down gambles that are likely to lead to gain.

"Laboratory and field evidence suggests that people often avoid risks with losses even when they might earn a substantially larger gain, a behavioral preference termed 'loss aversion'," they wrote.

"For instance, people will avoid gambles in which they are equally likely to either lose $10 or win $15, even though the expected value of the gamble is positive ($2.50)."

They studied two women with a rare genetic condition called Urbach-Wiethe disease, which damages the amygdala, the almond-shaped center in the brain that controls fear and certain other acute emotions.

The researchers compared the women's responses to 12 people with undamaged brains. They noted this kind of study usually involves only a few people as it is not possible or ethical to deliberately damage a person's brain to see what happens.

The volunteers were asked to make gambles in which there was an equal probability they would win $20 or lose $5 (a risk most people will take) -- or would win or lose $20 (one most people will reject).

The two patients with damaged amygdalas fearlessly risked a $50 pot.

Results 0% 0%: Please log in to vote; Do you think this Freespeech is worth it?; Yes I do — No I don't

Spread it:

Send to your contact

Name:
Email:
Send

Direct link:

Please log in to use the follow features

What does it mean to follow on CorpFreeSpeech?
Following a FreeSpeech or a FreeSpecheer simply means having updates displayed on your admin section.

Follow This FreeSpeech