Loss Aversion User Experience (UX) topic overview/definition

What is Loss Aversion?

Loss aversion is a behavioral economics concept referring to people’s judging the avoidance of loss as being more important than the acquisition of equivalent gain. That is, the unhappiness of losing $10 is greater than the happiness of finding $10. Loss aversion influences decision making and plays a part in determining the appropriate copy to use in designs.

Loss aversion was coined by researchers Amos Tversky and Daniel Kahneman, who conducted a number of experiments on decision making. Their experiments show that potential losses have twice the impact on happiness than potential gains do. This means that if the average person must risk something in order to gain something, that individual will want the gain to be at least twice as much as the risk.

Loss aversion carries a heavy implication for designers—how we provide information on webpages and interfaces where users have to make decisions is therefore crucial. How we describe potential losses and gains will affect how likely people are to purchase something or choose an option. For example, it is better to frame an option in relation to what people stand to lose, rather than what they stand to gain, if they choose it—unless the potential gain is very high. Understanding the human tendency to (quickly) “assume” ownership of an item/service enjoyed on a free-trial basis is likewise valuable here—the prospect of losing free merchandise/privileges is part of the dynamic of loss aversion.

Literature on Loss Aversion

Here’s the entire UX literature on Loss Aversion by the Interaction Design Foundation, collated in one place:

All literature