What is the Loss Aversion Bias?

Have you ever wondered why brands like Spotify or Amazon prime are willing to give their customers free trials? Doesn't it seem like a waste?
Written by
Skillcamper
Published on
October 13, 2023

Have you ever wondered why brands like Spotify or Amazon prime are willing to give their customers free trials? Doesn't it seem like a waste? Actually, what they are doing is playing into people's loss aversion bias. This bias is a psychological phenomenon that makes people inclined to want to continue using things they already own.

With a free trial or a sample product, companies want to ensure that people own their products and get used to them. Later, they can be easily convinced to buy these products, since they do not wish to give up something that already belongs to them. People experience losses more profoundly than gains or acquisitions. We do more to avoid losing something than to actively buy it.

The loss aversion bias is one of many examples of cognitive biases or the mind's natural tendencies or preferences. These behaviour patterns are observable across all audiences and are used by businesses to influence customers' behaviours and decisions.

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