This is correct.
Most people over-react to what will be a perceived loss, rather than focus on the benefits of a win. Tons of studies bear this out.
It's a standard tactic to use against someone you're negotiating with.
It's programmed right at your genetic level.
Organisms that prioritize avoiding risk are actually more likely to pass along their genetic fitness to offspring than those who take risks for potential rewards.
You see this play out all the time...the crazy teenage boy who risks all for the attention of a girl, who subsequently breaks his neck jumping from the garage into the pool.
Here's a fine example of risk aversion:
Let's say I set up a booth, and offered everyone 10oz of chicken breast for $5, or 3oz of canned processed chicken for $1. Most of you will choose the 10oz chicken deal.
Now let's say I change up the prices; I offer that same 10oz of chicken for $4, or 3oz of canned processed chicken for free. The relative valuation of each is the same. However, now, nearly all of you will choose the free canned chicken instead of paying for my chicken breast deal.
Odd, isn't it? I didn't change how much the chicken breast was worth relative to the canned chicken. But now that you know you can have canned chicken for free if you just reach out and take it, there's a part of your brain that won't pass it up, even though I'm offering you an incredible deal on the chicken breast, which is what you really want.
You can argue with me that you'd still choose the chicken breast, but studies bear out that the lion's share of people (to a statistically significant value) will avoid the risk of losing something they thought they had, at the expense of a potential larger reward.
How much reward do I have to give you to avoid a loss? Simply put, the marginal utiltity on the reward has to be about double the loss in marginal utility of risk you're avoiding.
In other words, 10oz of chicken at $4 must be no less than twice as useful to you as 3oz of free canned chicken. If you don't perceive that to be the case, then I'll need to give you more chicken breast for $4, and keep upping the ante, until I trip your marginal utility meter. Since we all value chicken breast differently, this can become quite mercurial when negotiating. But there's one tried truth amongst men; we can't help over-reacting to a loss...any loss. And when you push a man in the moment, he doesn't always have time to carefully evaluate his marginal utilities, particular if he's not really noticing he's in a negotiation.
The wise man uses this tactic against the uninitiated to enforce his desired negotiation outcomes. Which of course, has to be moderated against the other man's BATNA (best alternative to a negotiated agreement).
It's really neat stuff when you start digging into how interestingly we all behave, as a great unwashed mass of people. As a whole, we're all quite predictable. As a single unit, we're all quite unpredictable.
