Do you ever read a book and think wow I should be friends with this person? Thats how I felt in 2011 after reading The Fastlane book by MJ Demarco. Today the fastlane forum is still alive and well but the time to follow forums is so small these days but a quick newsletter read always provides great advice and tips. This week he covered loss aversion. Check out the bullet points below on how you can use loss aversion and fear appeals in your everyday business.
- People stick with jobs they hate. Because they fear the loss of status and stability. Even when they have the potential to earn more doing something else
- People tend to overvalue what they own. Because they relate selling with losing (the endowment effect). So yes, Tyler Durden was right. The things you own end up owning you
- Investors sell their winning positions but keep the losing ones forever. Because they don't want to realize the loss
- People try to cover their mistakes even when it's inadvertent. Because they fear the loss of credibility. The audit firm Arthur Andersen that caused the Enron Scandal was not convicted of securities fraud — but of shredding tons of documents to cover up its errors and avoid potential fines
- Organizations resist change. Because the potential losers of the change are always louder than the potential winners