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How Fear Affects Our Decisions

We are all gripped by fear from time to time, but as persuasive as fear can be, it’s not a good investment guide. For example, few accidents are more horrifying than airplane crashes, yet the fear elicited by such disasters depresses stock beyond reason. Aviation disasters, on average, cause actual losses of less than $1 billion, but the loss in the value of stocks following a major plane crash averages more than $60 billion. Fear misleads us to avoid risk
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Unhealthy Attachments

Have you ever made yourself suffer through a bad movie because, having paid for the ticket, you felt you had to get your money’s worth? Some people treat investment the same way. Behavioral economists have a name for this tendency of people and organizations to stick with a losing strategy purely on the basis that they have put so much time and money into it already. It’s called the “sunk cost fallacy.” Let’s say a couple buy a property next
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