Loss Aversion
Losing $100 feels twice as bad as gaining $100 feels good. This asymmetry causes people to make irrational decisions — holding losing investments too long, avoiding reasonable risks, or paying for insurance they don't need.
Present Bias
Your brain values $100 today more than $150 next year, even though waiting is objectively better. This bias explains why people don't save for retirement, don't invest in education, and choose immediate gratification over long-term wealth.
The Social Comparison Trap
Spending increases to match your peer group regardless of whether you can afford it. This is why lottery winners go broke and why people earning $200k still feel financially stressed — they're comparing to the people around them, not to objective benchmarks.