• DOI:10.1002/jcpy.1156
• Corpus ID: 212850733

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

@article{Mrkva2019ModeratingLA,
  title={Moderating Loss Aversion: Loss Aversion Has Moderators, But Reports of its Death are Greatly Exaggerated},
  author={Kellen Mrkva and Eric J. Johnson and Simon Gaechter and Andreas Herrmann},
  journal={ERN: Other Microeconomics: Decision-Making under Risk \& Uncertainty (Topic)},
  year={2019}
}

• Kellen Mrkva, Eric J. Johnson, +1 author A. Herrmann
• Published 13 December 2019
• Psychology
• ERN: Other Microeconomics: Decision-Making under Risk & Uncertainty (Topic)

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, experience, and education were associated with lower loss aversion, though people of all knowledge, experience, and education 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 alternative accounts rooted in status quo bias, emotion, or feelings of ownership. In addition to discovering key 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.