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I have been engaged with many decisions makers who are evaluating whether or not to use Extended Validation SSL on their sites, and I have repeatedly observed how a psychological phenomenon called loss aversion biases this decision-making process.

Loss aversion is the well demonstrated tendency for humans to value what they have disproportionately higher than what they think they can get. For example, if you make a 50/50 bet, if you’re like most people you’ll be more worried about the money you could lose than the money you could gain. At its most extreme, you can see loss aversion manifesting itself in the form of people going out of their way to find excuses not to spend money on what clearly are smart investments. This behavior is quite routine and regularly observed in a variety of industries.

Loss aversion comes into play when companies evaluate EV SSL. A very compelling potential benefit of EV’s “green address bar” is that it is reassuring to site visitors, which can lead to increased transactions, more site usage, and a better brand impression. The challenge is that these effects are very hard to measure since the architecture of SSL certificates make A/B split testing extraordinarily difficult to perform.

On the other hand, the increased cost of EV SSL is easy to quantify. That means decision makers must compare the very real, visceral costs of some extra budget against the abstract cost of a business improvement that they will never be able to prove. Loss aversion dictates that these decision makers will value the visceral cost in money more strongly than the abstract benefit in unmeasurable improvement to site performance.

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