investigating how given dollar amounts can mean different things to individuals depending on the situation.

This can lead to decisions that appear outwardly inconsistent, or irrational, to the outside observer.

The way the mind works, according to this view, may seem inconsistent to traditional economists but is

actually far more complex than an unemotional cost-benefit adding machine. For example, a traditional

economist would say that if you lost a $10 bill today, and also received an extra $10 in your paycheck, you

should feel perfectly neutral. After all, –$10 + $10 = $0. You are the same financially as you were before.

However, behavioral economists have conducted research that shows many people will feel some negative

emotion, such as anger or frustration, after those two things happen. We tend to focus more on the loss than

the gain. We call this loss aversion, where a $1 loss pains us 2.25 times more than a $1 gain helps us, according
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