Speaker 1: Homenet Properties hit a record low valuation today after a poor first quarter. The company's founders say they are not deterred by the slump in valuation, but analysts say the business model is untenable and founders should consider selling what's left of the company.
Speaker 2: The sale of a prominent rental car company has been finalized today after the company suffered massive losses earlier this year. The company's co-founders are already onto their next venture. Stay tuned for more news on that, next.
Katy Milkman: Did you notice the contrast between those two news clips about struggling businesses? Both described companies that ran into trouble and whose leaders had to make tough choices, continue operating the business or sell? But they took different paths. Which was better? In this episode of Choiceology, we explore questions about risk-taking in the face of losses, and a particular tendency to take extra risks after big losses in some situations, but not in others.
I'm Dr. Katy Milkman, and this is Choiceology, an original podcast from Charles Schwab. It's a show about the psychology and economics behind our decisions. We bring you true and surprising stories about high-stakes choices, and then we examine how these stories relate to the latest research in behavioral science. We do it all to help you make better judgments and avoid costly mistakes.
Mary Stockwell: When I was a little girl, there was something about George Washington and the Revolutionary soldiers. I would go to the library, and I would get college-level and high-school-level history books on the revolution, just to hold them, just to look at the maps. I couldn't read them.
Katy Milkman: This is Mary.
Mary Stockwell: My name is Mary Stockwell. I'm an American historian. I have a PhD in American history. I've worked as a writer in the business world, and then I was a professor and department chair, teaching history for a long time at Lourdes University, outside of Toledo.
Katy Milkman: Mary is an expert on the American Revolution, and she's here to tell us about two particular battles, one in the north and one in the south, that were significant turning points in the course of the war.
The year was 1776. America was on the brink of declaring its independence from the British after achieving considerable success on the battlefield. But the Brits wanted to re-establish firm control of the colonies.
Mary Stockwell: The British start at Boston, thinking, "Oh, they're the troublemakers. If we can crush them, we'll end this revolution." They can't crush the people of Boston, especially with George Washington commanding the Continental Army and encircling the city with artillery. The Americans won a great victory at Boston. They pushed the British out as of March the 17th, 1776. And now, we are heading towards July and August 1776, and the British are on their way. Having lost Boston, they've got to choose what to do next. They're coming down the coast, are going to take New York.
Katy Milkman: New York was thought to be friendlier to the British. The city housed a large trading port where the colonies and the British Empire exchanged wares.
Mary Stockwell: Just about the time that the British are on their way to New York City, to attack it and try to take it under their control, the Americans signed the Declaration of Independence in Philadelphia. And this is the background of the Battle of Long Island.
Katy Milkman: The pressure was rising for the British to regain control of the colonies, and General George Washington guessed that the British would make New York City their next target.
Mary Stockwell: Washington guessed correctly. So he races the Continental Army from Boston south, and he puts fortifications up in Lower Manhattan. He puts more fortifications up in Northern Manhattan. Then he crosses over to the western tip of Long Island, and he mans the Brooklyn Heights that look back over the East River towards New York. He's got men to the south, and he takes men out to the very western tip of Long Island. He lays out an excellent battle plan. He knows they're coming.
The eyewitness accounts of what it's like when the British Navy—400 ships, 32,000 men—show up overnight, and they fill the New York Harbor. The masts of the ship made it look like suddenly a forest surrounded Lower Manhattan, and the attack begins on August the 27th, 1776. And Washington has done a great job, but he's made one horrible mistake. He has forgotten that the British, with their navy, can sail to the eastern end of Long Island. They're going to bring 10,000 men of their huge army due west. They're going to come up to the rear of the Brooklyn Heights. Washington, with all his brilliance and his charisma and guessing correctly and all his choices, he has failed to protect the rear of the Continental Army.
Katy Milkman: The British surprised Washington by marching up the Jamaica Pass, a rarely used road on Long Island that Washington had left unguarded. This mistake left the Continental Army vulnerable, and the British began a three-pronged attack from the rear, fighting with a fierceness that overwhelmed the Americans. Many revolutionaries were captured or killed.
Mary Stockwell: George Washington, he is not there at the Brooklyn Heights. He crosses from Manhattan. He watches what's happening. He knows it's a disaster, but his men keep fighting as long as they can. The trouble that Washington sees is, "Oh my God, they're doing to us in New York what we did to them in Boston," and he realizes if he waits too long and Brooklyn Heights are surrounded by the artillery of the British, nobody will survive. This is the end of the Continental Army. This is the end of the United States of America.
Katy Milkman: Washington had a critical decision to make: continue fighting to the bitter end or retreat?
Mary Stockwell: So he makes a decision. "We are going to flee. I'm going to get my 9,000 men." It's dwindling down because he's going to lose 1,000 men already in this battle. "I'm going to get everybody back to Manhattan," and he's lucky that he has brought sailors from Boston. And he says, "Get me every flat boat ship you can." And in the middle of the night—it's August the 29th—he in the dark loads 9,000 men and off they go, rowing back to Manhattan.
The next morning, it's August the 30th. The British assume they're going to begin their bombardment of Brooklyn Heights. It's amazing—a fog falls down over the East River. The British do not see the last Americans, including George Washington, rowing over to Manhattan. Washington has escaped. He's going to fight another day. He's not going to give up Manhattan, but the Brooklyn Heights are lost. He has lost the battle of Long Island.
Katy Milkman: Washington may have lost the battle, but he saved the Continental Army by retreating rather than digging in.
Mary Stockwell: It's remarkable that he didn't want to, "Let's all fall on our swords and go down in history as, 'Well, we lost the cause, but we met the enemy.'" No, you run away to fight another day. That's pretty much unheard of in 17th, 18th century battles in Europe.
Katy Milkman: As the revolution waged on along the coast of New England, Washington continued to take very calculated risks by strategically retreating from many other battles, including the Battle of White Plains, followed by Fort Lee in New York.
Mary Stockwell: What George Washington has to learn is you're not going to always fight and win battles and surrender. You might have a great victory here, a great victory there, but there are other things you can do. You harass, you surprise, you engage, and you retreat. So much of the American Revolution is retreating. Washington has come up with a new way to fight. He realizes, "I just have to keep my army in the field long enough to wear the British down, to give the national government and the state governments time to form this idea that we can govern ourselves." So he truly was a revolutionary leader who understood, "I'm fighting a new way to save and defend and help create this thing called the United States."
Katy Milkman: By 1778, both the British and Continental Armies were exhausted. The British saw that the conflict in America was draining their resources, and they needed to accelerate an end to the fighting. So the British asked themselves …
Mary Stockwell: "Where do we go next? Everybody up in the north hates us, and the decision is made: The south will be our friend." And for a while, the British, they're right.
Katy Milkman: The British had support from southern loyalists who wanted British rule in the American colonies, and under the direction of Lieutenant General Charles Cornwallis, the British took control of several southern cities, including Savannah, Georgia, along with Charleston and Camden, South Carolina.
Mary Stockwell: And it looks like the British have won the south, but they've got to make a decision, and it's going to be up to General Charles Cornwallis to decide, "What do we do if we just have a couple of big cities, and we don't have the interior? How can we go to the negotiating table and say, 'We really got control of North Carolina, South Carolina, and Georgia, and we're going to keep it in our empire?'"
Katy Milkman: Cornwallis needed to decide if the British should attempt to squash the patriot bands in the southern interior.
Mary Stockwell: And Cornwallis makes a decision. "We're going for it. We are going to find those patriots, and we're going to defeat them in battle." And Cornwallis has at his side a man by the name of Banastre Tarleton, who was the commander of the Highland Brigade, and Cornwallis goes right into it, and he begins to lose. He loses big battles.
Katy Milkman: Cornwallis was defeated across the Carolinas, including in the Battle of Kings Mountain and in the Battle of Cowpens near Chesney.
Mary Stockwell: The British are defeated badly by the Americans, and they're losing a quarter of their men every time they fight.
Katy Milkman: Even with a dwindling number of soldiers, Cornwallis gave the southern campaign another push—this time in an attempt to corner one of George Washington's most talented officers in the south, Major General Nathanael Greene.
Mary Stockwell: And Cornwallis decides to lead an army and to try one more time, and he begins to chase Nathanael Greene through the Carolinas, and he catches up with them at a place called Guilford Courthouse, little crossroads, little courthouse town in North Carolina. And they're along this thing called the Salisbury Road. It's running north and south through the Carolinas. And Cornwallis said, "I've got to get a victory over this man. If I can defeat Nathanael Greene, that can end this in the south. I don't care if my men are tired. I don't care if I'm finally outnumbered." He's actually outnumbered. But again, at Guilford Courthouse, he catches up with Nathanael Greene and the Continental Army.
And Greene lines his men up so brilliantly, he puts them in three lines. He puts the North Carolina militia up front on the road, either side of the road, Virginia militia, couple hundred yards behind him, the experienced Continental soldiers behind them. And Greene says, "This is how we'll fight that first line, the Carolinians. When Cornwallis and Tarleton shoot, you take a couple of volleys, retreat. The British will come forward." Tells the Virginians, "Do the same thing, a couple volleys and then retreat, and then they'll have to come face the Continental Army."
It's a brutal battle. It's a brilliant plan on Greene's part. The battle only lasts 90 minutes. And Cornwallis, he's only got 2,000 men to Greene's 4,000 men. But he's got to get a victory in the interior of the country, or the cities will remain meaningless on the coast. They throw themselves at that first line. It gives away. They throw themselves at the second line. The Americans fight but give away.
Katy Milkman: Cornwallis managed to punch through the first two American lines, but by the time the British reached the third line of Continental soldiers, they were falling apart.
Mary Stockwell: Cornwallis's men are in disarray. He's lost almost a quarter of his men, killed or wounded. He does not withdraw. He pushes them forward.
Katy Milkman: Cornwallis and his British soldiers forged on, but like Washington had done many times before, Greene decided to retreat from battle. It was a wise tactical move by the American general that showed his aversion to unnecessary risk.
Mary Stockwell: The British win the field, but Cornwallis loses a quarter of his men. It's a victory like a pyrrhic victory. Greene has really won the day psychologically; he will live to fight another day. And Cornwallis looks at this disaster, and he says, "My God, these Americans, they fight like demons." He used that word. He said, "They're demons."
Katy Milkman: Cornwallis's decision to fight until the bitter end left the British Army depleted.
Mary Stockwell: Cornwallis would not face the fact that he had lost control of his own men, that they were almost fighting like madmen themselves, which was terrible. I sometimes … Cornwallis, why didn't you just stop, regroup, step back, take a break? You've only been fighting for an hour or so. If you reformed your lines, calmed everybody down, I think maybe you could have defeated that third line and maybe gone on to chase and capture Nathanael Greene and really win a decisive victory at Guilford Courthouse. Instead, you lost control of your men.
Katy Milkman: Of the 2,000 British soldiers, 500 were killed or wounded at the Battle of Guilford Courthouse.
Mary Stockwell: That's just a tremendous loss that he can't overcome, that the British are finally outnumbered in the south.
Katy Milkman: Cornwallis's pyrrhic victory at Guilford Courthouse damaged the ability of the British to continue fighting in the south. Greene's strategic retreat, on the other hand, was extremely effective.
Mary Stockwell: What's amazing about Guilford Courthouse is this strategy that Washington invented in the north, that his young generals and soldiers bring south, continues to work, and that is, "As long as we stay in the field, as long as we fight, as long as we keep enough men going, that this war is dragged on and on and on and on, we are going to win this war." And that's why Guilford Courthouse was so amazing. People are troubled by it to this day. It's like, "Oh, well, did Greene win? Did he fight to a draw?" In the short run, it appeared as though he lost because he fled. But in the long run, again, it proved finally, once and for all, that the strategy was working in the south.
Katy Milkman: Cornwallis still didn't give up. He and his remaining men targeted Virginia next, with the aim to go after Washington, Thomas Jefferson, and other prominent figures fighting for the American Revolution. But things didn't go according to plan. By the end of September of 1781, Washington's men had trapped the British in a small Virginia town called Yorktown. The battle at Yorktown would be the last decisive battle of the American Revolution, with a massive victory for the Americans. Overall, the Americans showed great wisdom and restraint in taking many calculated risks after their early losses in New York.
Mary Stockwell: The war will go on for two more years, but this is going to be a war ended at the negotiating table. We got to remember that. After Yorktown, very formally, everybody goes to Paris, and we're going to hammer it out, who controls what. One reason the British will lose everything is because they never got control of the ground. They had a couple of port cities, they had New York, they had Savannah, they had Charleston, but they had nothing else. The rest of the countryside might've been divided, but it's very clearly in the American camp. Americans want to get started. "Let's start the United States of America."
Katy Milkman: Mary Stockwell is a retired professor of history at Lourdes University. She's also the author of several books on American history, including The Unlikely General: "Mad" Anthony Wayne and the Battle for America. You can find links to her work in the show notes and at schwab.com/podcast.
You probably noticed a stark difference between the strategies employed by the American and British armies in this recounting of the Battles of Long Island and Guilford Courthouse. George Washington and Nathanael Greene cut their losses, made strategic retreats, and lived to fight another day. Whereas the British, and particularly Charles Cornwallis in the Battle of Guilford Courthouse, chased previous losses and setbacks by fighting doggedly to the bitter end. Cornwallis lost a quarter of his men in that particular battle, taking risks that precipitated the end of the American Revolution and the beginning of the United States as an independent nation.
So why did the Americans move on so effectively after early losses on the battlefield, regrouping and then taking smart risks? My next guest is here to discuss his research on something called the realization effect. The basic idea is that we think very differently about things that have gone awry when we've formalized our losses—say, by selling a stock or another asset that's dropped in value or by losing a battle in a wider war.
You might be wondering, what's the alternative? The alternative to formalizing or realizing our losses depends on the context. If you're invested in a stock or other asset, until you sell that stock, even if it's down in value, you haven't formally realized the loss. Selling the asset is a realization event. And if you're in a war and never lose a battle, you haven't formally realized a loss yet either. It turns out that if we've formalized a loss or realized it, we're more risk averse about our next decision than if we haven't made that realization yet and are still hoping to get things to turn around. We're still holding out hope, and so we'll take crazy risks.
Today, I've invited Alex Imas to join me and talk a bit about his research on the realization effect and how our perception of whether a loss is locked in and realized or merely an unrealized blip that might still turn out OK can change our taste for risk. Alex is a professor of behavioral science and economics at the University of Chicago's Booth School of Business.
Hi, Alex. Thank you so much for taking the time to talk to me today. I really appreciate it.
Alex Imas: Thanks so much for having me, Katy. I'm super excited to be here.
Katy Milkman: I would love it if you could start by describing some of the outstanding empirical work you did to really establish that, following a realized loss, people tend to avoid the risk that others chase after a loss that isn't realized.
Alex Imas: Yeah, so I came to it from two different directions. So the first direction was actually not collecting my own data, but to try to use other people's data to see if realization made a difference. So what I did was I took a bunch of papers that had looked at this question, and this was again a large literature, and tried to see is there a realization event? In some cases, I actually was able to get other people's data and reanalyze it, trying to see if realization made a difference.
And essentially, in the experimental literature, this was pretty easy. For example, if people were in an experiment and they were given money to invest in a bunch of lotteries over time, and a typical study looks like "Look, here's a lottery. Do you want to invest your money in it?" The person invests their money, and then they were told, "Look, you won or lost. Do you want to take on more risk in another lottery?" So on and so forth. And if nothing other than this happens, I would call these gains and losses "paper losses," because they haven't been realized yet. This is a term from finance. So in finance, you have the difference between a paper loss, which is on the books, but you haven't yet realized that because you haven't sold that position yet, versus a realized loss, where you actually sell the position at the loss.
You can apply the same sort of definition to almost any setting with risk-taking in the experimental context. If I lost money on a lottery, have I taken that money and given it back to the experimenter, or is it still on my desk? I know it's not mine anymore, theoretically, but I haven't parted with it yet. So by looking at the previous literature, I could see, look, here's a study where there was no realization. People just kept the money on their desk until the very end of the experiment. All the losses were paper.
And what you find in that literature is that you could rerun their analysis, and people took on more risk after losses, but there happened to be other papers using almost the exact same design that found the opposite. People took on less risk after a loss, and sure enough, if you looked at the instructions, people after losing took that money and gave it back to the experiment. So that was the first part of it before running anything.
Katy Milkman: I love that you reused that data. And just to make this crystal clear for our listeners, when you're talking about desks and experimenters, a lot of the time when we study risks and gambles or decisions about whether or not to take on risk in laboratory settings, what we do is we bring a bunch of students into a classroom, and they all sit at desks, and they make a series of decisions based on instructions that are provided, and they earn money based on the decisions they make. And so sometimes they then have to go realize there are gains and losses by turning in their paper instructions, collecting cash from the experimenter in the middle and then continuing, or sometimes they wait until the end of the whole thing. And so that's what you're talking about when you're saying realized versus paper, right?
Alex Imas: Right, exactly. Exactly. So essentially, it's whether these experimental subjects, whether they parted with their money back to the experimenter or whether they just kept it on their desk and basically finalized their position at the very end of the study.
Katy Milkman: It's so interesting. I love, of course, Alex, that not only did you reanalyze all of this data from previous research, but you then collected prospective data. You designed your own studies to explore this hypothesis that there's a realization effect. Could you describe some of the studies you conducted once you had this hypothesis in mind?
Alex Imas: So what I did was I took the students who came into the lab. They were given the exact same amount of money in the beginning of the experiment. They were told, "Look, you have a sequence of investment rounds. You can choose to invest part of that endowment in a risky asset or a safe asset. You can basically split that money over the course of four different rounds. You learn whether the investment goes up or down after every round, and you make the same exact decision again four times." So pretty simple. I invest my money. I find out whether it goes up or down. I make the decision again, again, and again. At the very end of the experiment, I basically take the amount of money that I have in my envelope. If I've ended up winning, the experimenter gives me money. If I ended up losing, I take that money out of the envelope. I give it back to the experimenter. And that was my paper treatment.
All of what happens during those four rounds basically is on paper because I haven't actually parted with the money that I'm losing until the very end of the study. The only thing I did in the realization condition is at the end of the third round, before you make the fourth-round investment decision, if you're losing or winning, you realize that outcome. If you're losing, you take that money out of your envelope. You give it to the experimenter. If you're winning, the experimenter gives you that money, and then you make a decision in the fourth round.
And then what I do is I compare people who have lost the exact same amount of money by the end of the third round, and the only thing that differs is whether that loss was realized or not. And I compare their risk-taking in the fourth round. And what I saw was that people took on more risk in the fourth round if a loss was on paper, and they took on less risk in the fourth round if it was realized.
Katy Milkman: I love that. It's such a clean way of testing this important question. What drives a realization effect, Alex? Why is it that you think we feel so differently about risk after a paper versus a realized loss?
Alex Imas: So in the paper on the realization effect, I have a theoretical framework of what potentially explains why people take on more risk after a paper loss, less after a realized loss. And this model is based on a framework called prospect theory, which, Katy, you've covered on a previous Choiceology podcast. And essentially, what prospect theory is about is the fact that the standard model we have in economics assumes that when people take on risk or make their choices, they're thinking about how much money they have in their bank account, how much money they're going to earn in the future, how much wealth they have in general in their house, in their human capital, all that sort of thing. They integrate that with the choice that they're making, and then they make decisions based on that.
But what prospect theory, in a very radical way, says is that people don't think about all of those things when making choices. They narrowly bracket their choices. So when I'm confronted with the gamble, I'm thinking about my status quo, where I'm at today, maybe how much money is in my pocket right now, but not really much else. And that status quo is a reference point, and relative to that reference point, I feel good if I make money relative to that reference point, and I feel real bad when I lose money relative to that reference point. And what that means is that because the reference point is psychological in nature, it could be manipulated through my experience of everyday events. So realization is one of those events that resets people's reference point.
So for example, let's say I own a stock, and I put in $5 into it, and now it's worth $3. So now I feel like I've lost $2 because my reference point was the amount of money that I put into it. Now I'm at $3. I've lost $2. That doesn't feel good. If I sell it, I have to admit to myself that I lost money on it and have all of that negative emotional experience that's associated with it. But if I don't sell it, if I ride it out or maybe even take another risky choice that allows me to recover from that loss, well, that would make me feel really good. I never have to experience that negative "realization utility" from that loss.
So that's what drives the phenomenon of loss chasing, where people take on more risk after losing because they're trying to recover from prior losses. Their reference point is the same as what they started with. What realization does is reset people's reference points. So let's say I've lost $2 on the stock, and then I sell it. I've already experienced that loss in terms of the emotional response to that loss. I've reset my reference point. So now when I'm thinking about how much risk to take, I'm no longer motivated to take on more risk in order to recover from something. And so I don't take it because I feel bad. I don't want to experience more losses. And so after a realized loss, I take on less risk. After a paper loss, I take on more risk because of the fact that realization has this effect on my reference point.
Katy Milkman: That was an incredibly clear description, and I can tell that you're an amazing teacher. Why do you think that the realization effect is important? So in other words, why should it matter to our listeners that this happens?
Alex Imas: So I think the realization effect is something that I documented in the financial domain. Both the lab data and the field data that I've been looking at is financial. So I think that it's important for financial decision-making because, depending on when an outcome is realized, that's going to affect whether you chase your losses or not. So if I buy a stock and I lose money on it, I don't want to hold onto it forever until I lose more money on it. Before I actually experience those losses, I prefer to sell it pretty early on and move on to something better. But what we show is that actually people, if you don't realize their positions, if you don't reset their reference point, people keep on losing and losing and losing for a long time, and they're much worse off. So realization is actually something that aligns people's initial preferences with their behavior, and that's really important in financial contexts because it basically allows people to stick to their financial plans as they experience gains and losses. So the more realization, in some ways, the better, from their initial preference perspective.
In other cases, the realization effect is a bit more general. It's just any event that resets people's preference points where it allows people to align their behavior to their long-run self, to their initial preferences.
Katy Milkman: I really like that way of thinking about it. It's helpful to put it in the broader frame. It's not just about financial decisions. So what should our listeners consider doing differently now that they know about the realization effect?
Alex Imas: So if they trade, the important thing is to give yourself breaks between decisions. So what we find over and over again in that paper and in follow-up work is that if people don't give themselves breaks, or these "realization events," then they tend to chase their losses and realize their gains too early. And this will generate lower financial outcomes and lower satisfaction with your financial decision-making. So for listeners who are involved in trading, I would say, "Take as many breaks as you think you need. So if you're thinking about an important financial decision, and you've had some sort of prior gain and loss, take the day to think about it. Take the weekend to think about it."
That event is going to allow you to reset your reference point and come at the new decision in a fresh state of mind and stop thinking about how those prior gains and losses are going to be affecting you down the road. Because ultimately, unless you're making really, really big financial decisions, prior gains and losses shouldn't really be affecting you, and that's what realization allows to actually happen in terms of how people respond to those gains and losses.
Katy Milkman: That's terrific advice. Alex, thank you so much for taking the time to talk to me today. I really appreciate it.
Alex Imas: Thank you. I was really happy to be here.
Katy Milkman: Alex Imas is a professor of behavioral science and economics at the University of Chicago's Booth School of Business. He's also the author of several papers about risky decision-making, including the paper we discussed today titled "The Realization Effect: Risk-Taking After Realized Versus Paper Losses." You can find a link to it at the show notes and at schwab.com/podcast.
Successful investing is about both what you buy and what and when you sell. Alex Imas recently joined the Financial Decoder podcast to discuss new research that shows how investors focus too little on the sell decision, and their performance suffers for it. To learn what Alex and his co-authors found in their study, check out the episode "Do Investing Pros Make Smart Buy and Sell Decisions?" at schwab.com/FinancialDecoder or wherever you get your podcasts.
The realization effect is a bias I find particularly interesting because I've done some distinct but related work on what my collaborators and I call the fresh-start effect. That research, which has come up on the show before, is about the moments in our lives that feel like fresh starts or new beginnings—say, January 1st, or celebrating a birthday, or even experiencing the beginning of a new week. What my coauthors and I find is that people behave differently after fresh starts. We act like we've closed the chapter on our past missteps, which offers us a clean slate and motivates us to pursue our goals with renewed vigor. The realization effect is like a cousin of the fresh-start effect. Both rely on our funny psychological ability to find ways of putting the past in the past so we can start again.
The realization effect tells us that if we've managed to put a past loss behind us by, say, selling a losing stock or ending a relationship or wrapping up a battle, then we'll be able to make more clear-headed choices about risk going forward. But if we still feel that we're very much in the throes of losing, holding onto a losing stock or relationship and hoping for a turnaround, we have a greater tendency to take big risks that we may later regret. This may help explain why the British struggled towards the end of the American Revolution. They took unwise risks and dug in, while the Americans cleverly avoided similar mistakes after some early battles went against them. They learned to cut their losses and move on. The takeaway from my conversation with Alex is that in situations where risk is involved and you've racked up any kinds of losses, it's important to take breaks and give yourself time to reset or realize those losses. Otherwise, you're wired to take abnormal risks that you'll likely later see as a mistake.
You've been listening to Choiceology, an original podcast from Charles Schwab. If you've enjoyed the show, we'd be really grateful if you'd leave us a review on Apple Podcasts, a rating on Spotify, or feedback wherever you listen. You can also follow us for free in your favorite podcasting app. And if you want more of the kinds of insights we bring you on Choiceology about how to improve your decisions, you can order my book, How to Change, or sign up for my monthly newsletter, Milkman Delivers, on Substack.
That's it for Season 13 of Choiceology, but we'll be back before you know it. I'm Dr. Katy Milkman. Thanks for listening and talk to you soon.
Speaker 6: For important disclosures, see the show notes or visit schwab.com/podcast.
