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Gain and Risk

Author: Sophia

what's covered
In this lesson, we’ll discuss how the concept of gains and losses relate to the decision making and conflict resolution processes. Two areas of focus include:
  1. Potential Gain and Risk of Loss
  2. Gains and Losses in Conflict

1. Potential Gain and Risk of Loss

A potential gain is what an individual values and may obtain as a result of a given decision. When there's a potential gain, it’s something we hope we’re going to get, though we may not be certain that we will.

Conversely, a risk of loss can be defined as the chance that a person will not attain their goal and/or lose something valued as a result of choosing a particular option in a decision.

If there's a risk of loss, we tend to move away from meeting a particular need because we fear we're going to lose something valued.

When we juggle gains and losses in everyday decision-making, two of the potential gains that we consider most often are time and money; both of these are things that we don’t want to lose.

EXAMPLE

When you’re going shopping at the grocery store, you might cut out some coupons and take them with you so that you can gain as much as you can for the least amount of money.

EXAMPLE

You’re going to go out to dinner and a movie with your friend, and you need to choose a restaurant. Spending time with your friend is important, so you choose a restaurant that's close to the theater. This way, you’ll have more time to talk over dinner before you go to the movie.

did you know
There’s also been some interesting research showing that when people weigh gains and losses, they tend to evaluate avoiding losses as more important than maximizing gains.

This tends to be true, particularly in larger decisions, such as financial investments, where we may want to play it safe and not risk anything at all.

terms to know

Potential Gain
What an individual values and may obtain as a result of a given decision.
Risk of Loss
The chance that a person will not attain their goal and/or lose something valued as a result of choosing a particular option in a decision.

2. Gains and Losses in Conflict

All conflict resolution strategies are really built around the idea that parties can maximize their gains and minimize their losses when they enter a solution-oriented meeting.

Instilling that confidence in the parties is important; it's one of the things the mediator or the conflict-resolver will work to do.

The mediator will sit with the parties and show them what they have to gain by participating in this process. Regardless of which resolution method is used, there's more possibility of gaining by going through the process than losing.

summary
In this lesson, you learned that potential gains and risk of losses are two factors that are heavily considered in making both small and large decisions. You now understand how gains and losses are involved in conflict, as conflict resolution processes build themselves around the idea that both parties have the opportunity to maximize their gains and minimize their losses by participating. Good luck!

Source: ADAPTED FROM SOPHIA TUTORIAL BY MARLENE JOHNSON.

Terms to Know
Potential Gain

What an individual values and may obtain as a result of a given decision.

Risk of Loss

The chance that a person will not attain his/her goal and/or lose something valued as a result of choosing a particular option in a decision.