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Asymmetric perception of gains vs non-losses and losses vs non-gains: The causal role of regulatory focus

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  • Simona Sacchi
  • Luca Stanca

Abstract

Recent studies show that, while losses loom larger than equivalent non-gains, gains loom larger than equivalent non-losses. This finding, at odds with the loss aversion principle, has been interpreted within the framework of regulatory focus theory. In this study, we explore the causal effect of regulatory focus on the asymmetric perception of gains vs non-losses and losses vs non-gains. We examine the perceived effects of both hypothetical and actual changes in monetary wealth, while orthogonally manipulating framing, valence, and regulatory focus. We find a significant interaction between the three factors. The gain vs non-loss asymmetry in perceived satisfaction is stronger in promotion focus, while the loss vs non-gain asymmetry in perceived dissatisfaction is stronger in prevention focus. The results suggest that the effects of incentives framed in terms of (non)gains and (non)losses, depend on their congruence with the individual’s motivational state.

Suggested Citation

  • Simona Sacchi & Luca Stanca, 2011. "Asymmetric perception of gains vs non-losses and losses vs non-gains: The causal role of regulatory focus," Working Papers 214, University of Milano-Bicocca, Department of Economics, revised Nov 2011.
  • Handle: RePEc:mib:wpaper:214
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    References listed on IDEAS

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    More about this item

    Keywords

    Loss-gain asymmetry; regulatory focus; prospect theory; subjective value;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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