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What is the loss aversion effect in UX design?

Sheza Naveed

Grokking Modern System Design Interview for Engineers & Managers

Ace your System Design Interview and take your career to the next level. Learn to handle the design of applications like Netflix, Quora, Facebook, Uber, and many more in a 45-min interview. Learn the RESHADED framework for architecting web-scale applications by determining requirements, constraints, and assumptions before diving into a step-by-step design process.

The loss aversion effect is a type of cognitive bias often used in user experienceUX design and marketing. Therefore, economists tend to reference it more than psychologists do. The loss aversion effect refers to people’s dislike and avoidance of losing being of more importance to them than winning something.

The loss aversion effect has a significant impact on UX design and is thus taken into consideration by designers while designing interfaces. For example, when giving feedback or other messages, these features have to be presented so that the users are not negatively impacted.

Kahneman and Tversky arranged a series of experiments that showed “people tend to fear a loss twice as much as they are likely to welcome an equivalent gain.” As shown in the figure, there is a greater impact of losses than gains if the change in the absolute value is the same.

Value function in Prospect Theory, drawing by Marc Oliver Rieger.

A possible application of this is when giving discount offers or lucky draw ads. The ads should be worded to tell the users what they will lose if they do not take advantage of the offer.

Source: Dreamstime.com

The loss aversion effect has the following uses:

  • when a decision has to be framed as either gain or loss.
  • when the aim is to motivate the user to continue on a website or task.
  • when the aim is to motivate the user to start on a website or task.

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design
ux

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Sheza Naveed
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Grokking Modern System Design Interview for Engineers & Managers

Ace your System Design Interview and take your career to the next level. Learn to handle the design of applications like Netflix, Quora, Facebook, Uber, and many more in a 45-min interview. Learn the RESHADED framework for architecting web-scale applications by determining requirements, constraints, and assumptions before diving into a step-by-step design process.

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