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Our brains have an aversion to loss. The psychological “price” of losing is twice as powerful as the price of winning. So losing a certain amount when you gamble is twice as painful as the power of happiness of winning the same amount.

We also experience regret, another negative emotion when we lose. We second-guess and “what-if” ourselves.

Salesmen are trained in techniques to persuade you to buy if they mention factors that get you to feel these emotions.  For example, “Insurance on this DVD player only costs $XX and you surely wouldn’t want to lose the money this machine costs if something goes wrong.”

Sales’ personnel make some of their highest profits on sales of extended warranties. This is despite the fact that the statistical probability of an electronic device or appliance breaking down during its warranty period is very slim. This is an example of how our emotions sometimes overpower actual facts. You could save some money if you realize your chances of loss of very slim – certainly less than when you gamble or buy lottery tickets.