Why are Consumers Less Loss Averse in Internal than External Reference Prices?

Material TypeArticleLanguageEnglish
TitleWhy are Consumers Less Loss Averse in Internal than External Reference Prices? Author(S)Rutger van Oest (Author)
Abstract  The literature has produced mixed support for loss aversion in a reference price context and the outcome may depend on the type of reference price. One extant study has reported empirical evidence that consumers are less loss averse in internal than external reference prices, but without discussing causes or implications. In the current study, we reconcile relevant literature and propose this asymmetric loss aversion result as an empirical generalization. Next, we provide and test an explanation: two empirical regularities in pricing cause that consumers tend to observe few losses for external reference price and many losses for internal reference price, making them less sensitive to internal than external losses ...Paginationp 62-71
SubjectCommerceDescriptorsRetail trade
Journal TitleJournal of Retailing  
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