Here’s a strange, interesting and useful fact:

Given a choice between either losing or gaining an equal amount, we mammals will always opt to avoid a loss.

In fact, if you were given the choice between losing $10 of value or gaining $12, you’d opt to avoid losing $10.

I know, I know. That’s stupid.

I had an unforgettable, painful experience when I was a college student. I was walking down the corridor in a rarely visited part of the psych building at the University of Minnesota. I didn’t know it, but this was where behavioral experiments were conducted on mammals.

One, and only one, of the doors in the corridor had one a ten inch square window in it. Naturally, I looked in.

Here’s what I saw:

• A small rhesus monkey was strapped in some kind of Plexiglas contraption. The top of its head, the skull cap, had been removed exposing its living brain. There were numerous electrodes sticking out of its brain, like pins in a pin cushion, with small wires attached to each electrode. Directly in front of this tragic creature’s lips was a lit cigarette with smoke curling towards the ceiling. The monkey could barely lean forward enough to draw a puff on the fixed cigarette. When it did, it was rewarded with a pellet.

I later learned that the monkey was first taught to want to smoke by being fed only when it puffed and inhaled cigarette smoke. Gradually it learned to smoke. Later, when it was addicted, it was required to do work to earn a puff.

(Isn’t the nature of this experiment disturbing – who and why was it instigated, and isn’t it very much like what happens to people – but that’s another story. Here I want to address a different insanity, i.e., one will give up a larger gain to avoid a small loss every time though it’s contrary to one’s interest to do so.)

Back to the monkey, I remember my first impulse was to save the suffering creature from its living hell of Nazi-like behavioral torture (“experimentation”) regardless of the consequences to me. I soon realized, however, the monkey’s situation was hopeless as its brain was exposed – no skull cap. What could I do for it? Nothing!

For years, I wondered how that poor monkey came to its fate. One day, I found out.

Rhesus monkey are captured in India and shipped around the world to zoos and to labs for medical experiments. The way they are captured in the wild is intriguing and instructive.

Of course, normally a wild rhesus monkey would not allow anyone to get near it.

To outwit the monkey, the captors construct a bamboo box with the slates separated just enough to allow a monkey to reach in between them. They then place a beautiful, lush, ripe banana inside the bamboo box and strap the box securely to a tree.

A short time passes before a monkey approaches the box, reaches in and grips the banana. It cannot remove the banana as there is not enough space between the slates. Once the banana is clutched by the monkey it will not release it even to avoid capture.

The captor simply walks up to the monkey clutching the banana and takes it captive. To avoid the loss of the banana, the monkey relinquishes its freedom and life. Not a good choice.

While this seems like an extreme example, we routinely sacrifice huge gains because of an irrational and predictable need to avoid loss.

I’m currently experiencing this phenomenon with our MVP Affiliates.

These affiliates have an opportunity to become MVP Masters and own a million dollar business. To do so, they have to sponsor three Power System owners.

(To learn more about this opportunity, visit www.TatStore.com and click on the MVP Program link on the left on the home page.)

Many choose not to sponsor others into the tat business out of concern that inviting others creates competition for limited business in their locale.

Consequently, they forfeit a chance to own a million dollar business to avoid a perceived loss of some small business. Even when I point out that the irrationality of their fears (see Competition 101 on this blog), they persist – like a monkey clutching its banana – determined to avoid a perceived loss at all costs. Sad!

Kirk

P.S. If you would like to learn more about our predictably irrational behavior, I recommend the Dan Ariely book: Predictably Irrational.