Fear of Missing Out (FOMO)

People make irrational decisions when they are afraid they might miss out on a big opportunity.

Humans are loss averse, meaning we consider loses more than proportional gains. One artifact of this is called FOMO or fear of missing out. We don’t want to miss out on great opportunities, and this sometimes drives us to do irrational things. We might buy a product we otherwise wouldn’t because of a limited time sale. In the silicon valley startup scene, venture capitalists would pay huge premiums (2x to 3x times going valuation) to invest in a startup because they didn’t want to miss out on the next Facebook.

FOMO is often exploited for evil. Some games, especially on mobile platforms, use limited time offers and countdown timers to take advantage of FOMO. They try to elicit an irrational purchase the customer wouldn’t ordinarily make. Don’t do that.

Ashen