We over value the things we have, overreact when we can't have something anymore, and resist change. In other words, we hate loss. But because loss is frequent and inevitable, our hatred of it guarantees that we suffer. Let's take a look at the psychological mechanisms that make us act this way. The Endowment Effect Suppose that Nathan and Mae are two students at the same school. It is randomly determined that Mae will be given a school mug, which she gets to keep. Mae then writes down the le...

Suppose that mega-corp, a large corporation, has hundreds of employees, hundreds of thousands of customers, tens of millions of dollars of cash, a recognized brand, and an experienced CEO. Tiny-upstart, on the other hand, is just two twenty-five year olds with an idea, no funding, no users and no business experience. If mega-corp and tiny-upstart are in the same line of business, then by any reasonable stretch of the imagination tiny-upstart will lose the fight. So how is it that tiny sta...