Moderating Loss Aversion: Loss Aversion Has Moderators, But Reports of its Death are Greatly Exaggerated

Kellen Mrkva, Eric J. Johnson, Simon Gächter, Andreas Herrmann

Research output: Contribution to journalArticlepeer-review

9 Citations (Scopus)

Abstract

Loss aversion, the principle that losses impact decision making more than equivalent gains, is a fundamental idea in consumer behavior and decision making, though its existence has recently been called into question. Across five unique samples (Ntotal = 17,720), we tested several moderators of loss aversion, which supported a preference construction account. Across studies, more domain knowledge and experience were associated with lower loss aversion, though people of all knowledge and experience levels were loss averse. Among car buyers, those who knew more about a particular car attribute (e.g., fuel economy) were less loss averse for that attribute but not other attributes (e.g., comfort), consistent with the idea that people with less attribute knowledge are more likely to construct preferences, thereby increasing loss aversion. Additionally, older consumers were more loss averse across different loss aversion measures and studies. We discuss implications for several accounts of loss aversion, including accounts rooted in status quo bias, emotion, or ownership. In addition to discovering loss aversion moderators, we cast doubt on recent claims that loss aversion is a fallacy or is fully explained by status quo bias, risk aversion, or the educated laboratory samples often used to study loss aversion.

Original languageEnglish
Pages (from-to)407-428
Number of pages22
JournalJournal of Consumer Psychology
Volume30
Issue number3
Early online date19 Dec 2019
DOIs
Publication statusPublished - 1 Jul 2020

Keywords

  • Aging consumers
  • Decision making and behavioral decision theory
  • Economic psychology
  • Judgment
  • Knowledge and expertise
  • Learning

ASJC Scopus subject areas

  • Applied Psychology
  • Marketing

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