Amanda and Brenda are considering playing a game called Matching Twenties.In this game,Amanda and Brenda will each place a $20 bill on the table.Both players will then toss a fair coin.If both Amanda and Brenda toss heads or both Amanda and Brenda toss tails,Amanda wins the $40 on the table.If one woman tosses heads and the other tosses tails,Brenda wins the $40 on the table.
Amanda decides that she is not willing to play this game because a loss of $20 to Brenda would cause her to lose more utility than she would gain if she won $20 from Brenda.Which concept best explains Amanda's choice not to play the game?
A) hedonic editing
B) gain aversion
C) loss aversion
D) signaling
E) gain-loss asymmetry

Question

Quizplus · Accepted Answer

Amanda's decision not to play the game can be explained by loss aversion, which refers to the tendency for individuals to experience more psychological discomfort in response to losses than pleasure in response to equivalent gains. In other words, Amanda is more averse to losing $20 than she would be satisfied with winning $20, which influences her decision not to play the game.

Amanda and Brenda Are Considering Playing a Game Called Matching