Text 1
Behavioral economists have long maintained that loss aversion—the tendency to prefer avoiding losses to acquiring equivalent gains—is a fundamental feature of human decision-making. Pioneered by Daniel Kahneman and Amos Tversky, prospect theory suggests that this asymmetry is hardwired, reflecting an evolutionary adaptation where potential threats are weighted more heavily than opportunities. According to this model, the pain of losing a specific sum of money is psychologically twice as intense as the pleasure of gaining it, resulting in a persistent bias toward risk-averse behavior across diverse economic contexts.
Text 2
While loss aversion is accepted as an empirical fact, researchers like David Gal argue that its psychological basis is misunderstood. Gal contends that people do not possess an inherent cognitive bias against losses; rather, the phenomenon arises from situational factors, particularly attentional inertia. In experiments where participants were prompted to actively consider the potential benefits of risky choices, the apparent aversion to loss vanished. This suggests that decision-makers are not inherently biased toward loss avoidance but are simply more likely to focus on losses unless cognitive interventions guide their attention elsewhere.
Based on the passages, how would the author of Text 2 most likely respond to the claim in Text 1 that loss aversion reflects a 'hardwired' evolutionary adaptation?
- ABy suggesting that Kahneman and Tversky miscalculated the psychological ratio of loss to gain in their original prospect theory experiments.
- BBy agreeing that evolutionary adaptations explain why individuals focus on losses in experimental settings.
- By arguing that the behavioral pattern is not an immutable predisposition but rather a consequence of selective attention.Answer
- DBy asserting that individuals naturally experience greater pleasure from financial gains than pain from equivalent losses.