Loss aversion
A loss tends to feel bigger than a gain of the same size.
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- What it means
- Loss aversion is the tendency to weigh a loss more heavily than an equal gain. At the table it shows as playing differently when you are behind for the session than when you are ahead, with the same cards and the same price.
- How it is calculated
- Judge each decision from the chips in front of you now. Where the session stands does not change the equity of a hand or the price of a call.
- Worked example
- Down 40bb, a player calls a 20bb river bet needing 25% equity with a hand that wins 15% of the time, to avoid locking in the loss. Up 40bb they fold the same hand without thinking.
- Why it matters
- Chasing a loss and protecting a win both move you off the best play. The cards do not know how your night is going.
See also: Sunk cost, Stop-loss and stop-win, Tilt