Codie Sanchez breaks down loss aversion, the brain bias that makes us fear losing $100 more than we crave winning $200. She offers three fixes: reframe what you lose by staying put, make the potential gain two to three times bigger than the downside, and improve your odds by surrounding yourself with winners and taking many shots.
Chapters
You know what's crazy? Your brain is actually keeping you from becoming rich, and it's not even your fault. There's this study by a guy by the name of Daniel Kahneman who won a Nobel Peace Prize by figuring out something called prospect theory. And here's how it can make you a lot of money. Basically, participants in a study were asked if they would take a 50/50 gamble. They had a 50% chance to win $100 and a 50% chance to lose $100. What do they find? Most people won't take the bet until the reward is 2 to 3x as much as the loss, meaning they would have to have a 50/50 chance at winning $200 and losing $100. This is called loss aversion. Our brains are basically programmed feel the lows of losses more than the highs of wins, and it hurts more to lose. The problem is that making money comes on the other side of making bets. So how do you fix this? 3 ways. You flip the fear. You don't look at what you could lose if you failed. You think about what you're losing by staying where you are. 2, increase the potential reward. Your payoff has to be substantially bigger than what you could lose. 3, increase your odds of winning. So take a 50/50 bet, turn it into a 70/30, a 90/10. How do you do this quickly? Surround yourself with winners and take a lot of reps. Hard to lose when you're doing both.
