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- Title
The Boundaries of Loss Aversion.
- Authors
NOVEMSKY, NATHAN; KAHNEMAN, DANIEL
- Abstract
In this article, the authors propose some psychological principles to describe the boundaries of loss aversion. A key idea is that exchange goods that are given up "as intended" do not exhibit loss aversion. For example, the authors propose that money given up in purchases is not generally subject to loss aversion. The results of several experiments provide preliminary support for the hypotheses. The authors find that, consistent with prospect theory, loss aversion provides a complete account of risk aversion for risks with equal probability to win or lose. The authors propose boundaries for this result and suggest further tests of the model.
- Subjects
LOSS aversion; CONSUMER goods; PROSPECT theory; PURCHASING -- Social aspects; UTILITY theory; RISK aversion; PRICE increases; CONTINGENT valuation; CHOICE (Psychology); ECONOMIC aspects of decision making; SELLING -- Social aspects; ECONOMIC demand
- Publication
Journal of Marketing Research (JMR), 2005, Vol 42, Issue 2, p119
- ISSN
0022-2437
- Publication type
Article
- DOI
10.1509/jmkr.42.2.119.62292