We discussed an interesting thing in psychology today. We talked about a scenario of a person who bought two tickets for $15 each. They were for a movie he and a friend were going to go to later that day. When he went to the theater he found that he had lost his tickets, he still had $30 in his wallet. The question is now posed, if it were you would buy two more tickets for $30, or would you, because you already paid for tickets once, leave the theater. Most people say that they would not buy tickets again. Then we changed the scenario a little. This time the person had not bought the tickets yet and still had $60 dollars in his wallet. But when he arrived at the theater to buy the tickets he found that he was missing $30. Now, most people would buy the tickets.

So even though same amount of money is lost, why would a person not buy tickets in the first scenario and would in the second? This is called Loss Aversion. I think the reason a person wouldn't buy the tickets after having lost them, is that having lost what he already paid for he thinks "why should I pay for them again?" It doesn't seem just to him. But it's not the money that effects his reasoning, it is the fact that he bought and lost them that changes his action as we see from the second scenario.

It is interesting to see the pitfalls in human reasoning. It really doesn't make sense when you look at it outside both situations because the loss is the same, but for some reason our actions are changed.