Loss Aversion in Post-Sale Purchases of Consumer Products and Their Substitutes

Debajyoti Ray, Matthew Shum () and Colin Camerer ()

American Economic Review, 2015, vol. 105, issue 5, 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.

JEL-codes: D12 D81 L81 (search for similar items in EconPapers)
Date: 2015
Note: DOI: 10.1257/aer.p20151037
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Citations: View citations in EconPapers (9)

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