Question

question which example is not an example of loss aversion? select the correct answer below: you receive your paycheck of $25 and promptly lose it, making you angry because you were going to use it to pay your electricity bill. however when you get home, you find out that your rich aunt sent you $25. youre happy you have the gift money but youre still disappointed that you lost your paycheck. while at the zoo, you lose $5 out of your wallet. later you find $5 outside the penguin exhibit. since you found $5 you recognize that you are back to where you started regarding money and have neutral feelings about original loss of $5. you invest $1,000 in the stock market and your returns in 1 month are $3,000, leading to a total of $4,000. the next month the stock crashes and you lose $3,000. you are so upset with the loss, you pull all of your money out of the stock market.

Explanation:

Loss - aversion is the tendency to prefer avoiding losses to acquiring equivalent gains. In the first example, the person is still disappointed about losing the paycheck despite getting an equal - amount gift. In the third example, the person is very upset about losing the money in the stock market. In the second example, since the person has a neutral feeling about the original loss after finding the same amount of money, it does not show loss - aversion.

Answer:

While at the zoo, you lose $5 out of your wallet. Later you find $5 outside the penguin exhibit. Since you found $5 you recognize that you are back to where you started regarding money and have neutral feelings about original loss of $5.