Loss Aversion in Post-Sale Purchases of Consumer Products and Their Substitutes
- (pp. 376-80)
AbstractThis paper considers the measurement of consumer loss aversion in product markets. We introduce a test based on a "substitution effect," focusing on how the end of a sale affects sales not of the good itself, but a substitute good. Such an effect cannot be easily confounded with consumer stockpiling. Using a unique dataset from an online hardware retailer, we find evidence consistent with consumer loss aversion. Moreover, we find that less experienced consumers suffer a more prominent loss aversion bias compared to more experienced consumers.
Citation2015. "Loss Aversion in Post-Sale Purchases of Consumer Products and Their Substitutes." American Economic Review, 105(5): 376-80. DOI: 10.1257/aer.p20151037
- D12 Consumer Economics: Empirical Analysis
- D81 Criteria for Decision-Making under Risk and Uncertainty
- L81 Retail and Wholesale Trade; e-Commerce