Loss aversion and how much we hate to lose - Psychology for marketers

You can implement these tips to your site or you can keep losing subscribers every day. The story of loss aversion.

Imagine that one day..

… you’re in the office and you overhear you boss saying he wants to give you a raise of $400/month.
How happy would you be to find out about this unexpected gain?

Now imagine a different situation.
You’re making a coffee when you hear your boss talking to HR manager about.. cutting your salary down by $400/month.
How would that make you feel? Sad? Angry? Even furious?

Interestingly, research has shown that the feeling of losing and gaining the same thing is much different. We would rather choose not to lose over gaining the same thing. In other words, the negative feelings coming from the loss are much stronger than the positive ones coming from the gain.
Or putting it even shorter: we simply hate losing. And that creates loss aversion.

Science describes the experiment that shows just how strongly a human behaviour will change if the feeling of loss is introduced (you can also read more about it in Dean Buonamano’s book, Brain Bugs: How the Brain’s Flaws Shape Our Lives.)

In this study, participants were given $50 at the start. Then they were asked to choose between one of the 2 options:

  1. keep $30, or
  2. gamble with a 50/50 chance of keeping or losing the whole $50.

Results? Participated acted in a risk-averse way (43% decided to gamble).

Then the experimenters changed the secure option. Now they asked participants to chose between:

  1. losing $20, or
  2. gambling with a 50/50 chance of keeping or losing the whole $50.

What happened when one of the options was framed as a loss? The number of participants who decided to gamble grew to 61% (the difference between the 2 scenarios is statistically significant).

Loss aversion and how much we hate to lose - Psychology for marketers

Source: Science

Here is how framing a situation as either a gain or a loss impacts our decision making:

  • gain frame – risk-averse behaviour
  • loss frame – risk-seeking behaviour
Loss aversion and how much we hate to lose - Psychology for marketers

Source: Science


Next question is: How does it translate to marketing?
To leverage on this phenomenon, when expressing the outcome (buying your product) do it in a loss frame.
Talk of what your prospect will lose if they don’t buy rather than what they would gain by buying. Show them 2 options: buying (gambling) or a sure lose. This is where you will put them in a risk-seeking decision making scenario, and increase the number of people deciding to buy your product.

Here is an example for you too illustrate it better:
Don’t lose $100 every month on insurance. Buy xxx.’ (instead of: ‘Buy xxx and save $100 a month‘)

Take the same approach when writing your headlines. Focus on what your prospect will lose if they don’t take up your offer.

Now let’s take it even farther.
Because we don’t like losing, once we have something, we don’t want to let go of it (and to top it even more – we value it much more). This is called the ownership effect. What it means, is that by making your audience feel they already own your product, they will be more likely to buy it- because not doing so, would mean losing it.

I’m sure you’re asking yourself now: how can I create a feeling a ownership?

Here are some tips for you:

  • Use language that implies your audience already has the product.
  • Add videos showing a person using your product. (When our brain sees a person doing something, it assumes it is us. Watching somebody else use a product, makes us feel as we are the one using it)
  • Let people imagine having and/or using your product. In copywriting, use words such as picture, imagine, visualise.
  • Give away samples of your product.
  • Let your audience use your product for free for a limited period of time.

Now let’s get back to the headline for this article (and probably why you decided to read it):
You can implement these tips to your site or you can keep losing subscribers every day.
(see what I’m doing here? :P).
So go ahead and test these new ideas.
And once you do, don’t forget to share with other what results you observed.

Have you already used loss-aversion tactics on your site? Share with the community your results and tips.

Leave your comment below


  • Atticus

    Reply Reply July 28, 2016

    Hello Magda,

    Just wondering if you could explain this example for me. There is also a phenomenon called “regret avoidance” – which is a fear of regret.

    In an experiment, subjects were offered $30 in exchange for their lottery ticket, which costs $20. Most of them refused to sell, afraid that they might regret forgoing their potential ‘winning ticket’ for a mere $10 profit. The logical thing would have been to accept the $30, purchase another ticket (which has the same chance of winning) and be $10 better off!

    Using your example where participants are given the choice to:
    1) lose $20, or
    2) gamble with a 50/50 chance of keeping or losing the whole $50.

    Will a fear of regret (when they lose the bet and end up with nothing) push these participants to keep the $30?

    I feel that these 2 concepts are somehow related but at odds with each other. Does regret avoidance not influence behaviour in the risk-taking/-adverse manner, but rather in a passive/active manner i.e instead of being biased towards riskiness or safety, we choose to remain with whatever condition we were given in the first place.

  • ganesh bhojwani

    Reply Reply March 9, 2018

    I would like to share Highlighting this article, that this is perfect. The psychology in marketing differ from person to person. How people scrutinize their decision making strategy and how they optimize vary from person to person.

  • face book

    Reply Reply February 4, 2019

    Thank you, I have recently been searching for information about this subject for a
    while and yours is the best I have found out so far.
    However, what concerning the conclusion? Are you positive in regards to the

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