We avoid sticking our necks out because we fear loss and feelings of regret.
Looking back on my notes from ‘Why Smart People Make Big Money Mistakes‘ (Belsky and Gilovich), I came across the following note on the Endowment Effect:
We place an unreasonable amount of value on what we already have, more than if other people had the very same thing. I know this from my fantasy baseball pool. When I had Justin Verlander on my team, he was the best pitcher in baseball. But when he was on someone else’s team, he was a very good pitcher who could be replaced by a handful of others. When it came time to try and make a trade, I could see the downside of what I was losing more clearly than the upside of that I might be gaining.
This becomes a problem when trying to make a change in life, to try and chart a new course of action. We’re so scared of making a mistake that we’re more willing to stick with what we’re already doing, even if the new opportunity might be terrific.
Said Mark Twain, “Twenty years from now, you’ll be more disappointed by the things you didn’t do than by the ones you did do.”