We may like to win, but we absolutely hate to lose.

​The biggest fallacy in marketing is assuming that people are rational and their decisions, logical.  If it were so, the feelings invoked by losing something or gaining something (of equal value) should be the same. We should feel as pleased with a $100 gift as we feel bad that we have lost $100. But this is never the case .Psychologists have found that we feel a loss about twice as severely as we experience a gain. Feeling the pain of loss more acutely than feeling the pleasure of gain leads to people trying to avoid a loss more than trying to pursue a similar gain, a behavior called Loss Aversion.  Or as the Psychologists, Kahneman & Tversky, said, “Losses loom larger than gains”
 
Loss Aversion in the service of Environmental Protection. Tatiana Homonoff, from Decision Lab, UK, tested the theory of loss-aversion by assessing whether charging a tax of $0.05 (penalty) had a bigger impact on plastic bag reduction than offering a bonus (reward) of the same amount. Her results show that plastic bag used declined by 42% after the tax was implemented but did not change in the bonus treatment, evidence consistent with a model of loss aversion. Loss aversion explains why penalty frames are sometimes more effective than reward frames in motivating peopl, and encouraging desired behaviours . 
 
Loss Aversion for a Better Version of Yourself.  The website Stickk allows people to publicly commit to a positive behavior change (avoid binge drinking, save for retirement, run for  30 mins everyday etc). The goal-setting platform, created by behavioral economists at Yale University, uses a Commitment Contract, “a binding agreement you sign with yourself to ensure that you follow through with your intentions, and it does this by utilizing the psychological power of loss aversion and accountability to drive behavior change. By asking users to sign Commitment Contracts, Stickk helps users define their goal (whatever it may be), acknowledge what it’ll take to accomplish it, and leverages the power of putting money on the line to turn that goal into a reality”
 
Loss Aversion Helping Close The Sale. Leveraging Loss Aversion is how SUPREME, went from a small skateboarding store in New York to an $1 billion street-wear company with a cult-like following among teens.The retail value of Supreme's clothing isn't much, but once the items sell out, (which they always do, by design) they begin to increase in value, creatinga huge resale market and hype sparked by.
 
Looking to reduce shopping cart abandonment rates, a problem that results in lost revenue for almost every retailer, the flower delivery service, 1-800- Flowers, implemented a push notification strategy to bring potential buyers back to the app to finish a purchase.Sending promos to users over push notifications, the company was able to increase abandoned shopping cart conversions by 350% above the industry average. 
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Loss aversion is an extremely powerful tool catalyst to behaviour change. One time discount, limited offers, flash sales etc are commonly used tactics by marketers to advance sales The key is to leverage this understanding with a strong ethical compass in hand , to avoid inciting fear or plaguing on people’s insecurities, to use it to strengthen your brand’s equity and purpose, focussing on positive behaviour change, that help people achieve their goals, for their greatest good.