Emotions on Gains and Losses

People tend to be much more distressed about a loss than they are happy about the same amount of gain (speaking in terms of dollars). Some researchers have concluded investors typically consider the loss of $1 twice as painful as the pleasure received from the gain of $1. As a result, investors are willing to take more risks to avoid the pain of a loss than to ensure the pleasure of a gain. Faced with a sure gain, most investors are risk-averse. But faced with a sure loss, investors tend to become risk takers.