American Economic Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
Loss Aversion in Post-Sale Purchases of Consumer Products and Their Substitutes
American Economic Review
vol. 105,
no. 5, May 2015
(pp. 376–80)
Abstract
This 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.Citation
Ray, Debajyoti, Matthew Shum, and Colin F. Camerer. 2015. "Loss Aversion in Post-Sale Purchases of Consumer Products and Their Substitutes." American Economic Review, 105 (5): 376–80. DOI: 10.1257/aer.p20151037Additional Materials
JEL Classification
- D12 Consumer Economics: Empirical Analysis
- D81 Criteria for Decision-Making under Risk and Uncertainty
- L81 Retail and Wholesale Trade; e-Commerce