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

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

Authors

Andreas Herrmann

Kellen Mrkva

SIMON GAECHTER simon.gaechter@nottingham.ac.uk
Professor, Psychology of Economic Decision Making

Eric J. Johnson



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 predictions about what moderates loss aversion, which were derived from 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.

Journal Article Type Article
Publication Date 2020-07
Journal Journal of Consumer Psychology
Print ISSN 1057-7408
Electronic ISSN 1532-7663
Publisher Elsevier
Peer Reviewed Peer Reviewed
Volume 30
Issue 3
Pages 407-428
APA6 Citation Herrmann, A., Mrkva, K., Gächter, S., & Johnson, E. J. (2020). Moderating Loss Aversion: Loss Aversion Has Moderators, But Reports of its Death are Greatly Exaggerated. Journal of Consumer Psychology, 30(3), 407-428. https://doi.org/10.1002/jcpy.1156
DOI https://doi.org/10.1002/jcpy.1156
Keywords Applied Psychology; Marketing
Publisher URL https://onlinelibrary.wiley.com/doi/abs/10.1002/jcpy.1156
Additional Information This is the peer reviewed version of the following article: Mrkva, K., Johnson, E.J., Gächter, S. and Herrmann, A. (2019), Moderating Loss Aversion: Loss Aversion Has Moderators, But Reports of its Death are Greatly Exaggerated. J Consum Psychol. Accepted Author Manuscript, which has been published in final form at https://doi.org/10.1002/jcpy.1156. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Use of Self-Archived Versions.

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