Question, Comment? Send it Here!

Why does losing $1,000 hurt more than gaining $1,000 feels good? Why do we play it safe when we're winning but become willing to gamble when we're losing? And why do perfectly intelligent people make financial decisions that seem to defy logic?

In this episode of the Dr. Bryan Foltice Behavioral Finance Podcast, we explore the second of the Five Forces of Behavioral Finance: Emotion Beats Logic.

At the heart of this episode is Prospect Theory, the groundbreaking research of psychologists Daniel Kahneman and Amos Tversky that fundamentally changed how we understand decision-making under risk.

We'll explore how our brains evaluate gains and losses, why reference points matter, and how our attitudes toward risk change depending on the situation.

Through real-world financial examples and interactive decisions, we'll examine:

• Loss Aversion: Why losing money often hurts more than gaining the same amount feels good.
• Reference Dependence: How purchase prices, expectations, and previous financial highs influence our decisions.
• Diminishing Sensitivity: Why the psychological impact of money changes as the amounts get larger.
• The Fourfold Pattern of Risk: Why we sometimes avoid risk and other times actively seek it—even when the mathematical outcomes are equivalent.
• Regret Aversion, Fear, and the Affect Heuristic: How emotions influence investing, spending, and financial decisions.

We'll also connect these psychological forces to the Knowing–Doing Gap—the disconnect between what we know we should do with our money and what we actually do.

Because making better financial decisions isn't always about knowing more. Sometimes it's about understanding why we make the decisions we do.

Money Strong: From Knowing to Doing.

#BehavioralFinance #ProspectTheory #PsychologyOfMoney #LossAversion #FinancialDecisions #MoneyStrong #InvestingPsychology

Support the show

Subscribe to our Behavioral Finance Newsletter: https://www.moneystrong.net/behavioral-newsletter

Bryan Foltice Personal Website - www.bryanfoltice.com
Money Strong Website - www.moneystrong.net

Instagram - www.instagram.com/dr.bryanfoltice
Linkedin - https://www.linkedin.com/in/bryanfoltice

Disclaimer: www.bryanfoltice.com/cv