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That the value function for losses are steeper than that for the gains can be explained by the fact that 500 $ loss is felt much more to individuals than joy of gaining 500$. This tendency is demonstrated several times by different experiments by psychologists including Kahneman and Tversky in different contexts. This effect is multiplied by an ‘endowment effect’ where designers start feeling ownership of their design and hence value of their work and perceived loss looms much larger than actual value. This can be explained by the fact that people often price their items much more than what they would have paid for the same because they ‘value’ it much more with the feeling of ownership...
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