Kahneman’s Super Bowl

Super Bowl XLIX - New England Patriots v Seattle Seahawks

Kahneman: Clients Driven by Losses, Not Gains

In an address that was part social science, part high-end psychology and part homespun advice, with lessons from the “idiotic call” at the end of Super Bowl XLIX, Daniel Kahneman gave behavioral finance advice directly to advisors on Tuesday on day two of the IMCA New York Consultants Conference. Kahneman, a psychologist who won the Nobel Prize in economics and recently published “Thinking Fast and Slow,” began by speaking about loss aversion: that human beings feel and fear loss much more than they enjoy gain. Saying that “your grandmother knew it and so did mine,” the Princeton professor said “your clients are more sensitive to loss than gain,” that they can be “infinitely loss averse when ruin” is one of the possible outcomes and that when it comes to wealth preservation, “people aren’t concerned about their level of wealth, but about changes in their wealth.” ….[READ]

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