Loss Aversion and Consumption Choice: Theory and Experimental Evidence
AbstractIn this paper we analyze a consumer choice model with price uncertainty, loss aversion, and expectation-based reference points. The implications of this model are tested in an experiment in which participants have to make a consumption choice between two sandwiches. We make use of the fact that participants di er in their reported taste di erence between the two sandwiches and the degree of loss aversion which we measure separately. We find that more loss averse participants are more likely to opt for the cheaper sandwich provided that their reported taste di erence is below some threshold, confirming the model s predictions. --
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Bibliographic InfoPaper provided by Verein für Socialpolitik / German Economic Association in its series Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order with number 79943.
Date of creation: 2013
Date of revision:
Other versions of this item:
- Karle, Heiko & Kirchsteiger, Georg & Peitz, Martin, 2012. "Loss Aversion and Consumption Choice: Theory and Experimental Evidence," CEPR Discussion Papers 9183, C.E.P.R. Discussion Papers.
- C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
- D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
- D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
This paper has been announced in the following NEP Reports:
- NEP-ALL-2014-02-02 (All new papers)
- NEP-CBE-2014-02-02 (Cognitive & Behavioural Economics)
- NEP-EXP-2014-02-02 (Experimental Economics)
- NEP-UPT-2014-02-02 (Utility Models & Prospect Theory)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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