A Meta-analysis of Loss Aversion in Product Choice

Abstract

Loss aversion is a behavioral phenomenon with game-changing implications for economic theory and practice. We conduct a meta-analysis of 33 studies (providing 109 observations) investigating loss aversion in random utility models of brand choice. Specifically, we use multilevel modeling techniques to examine potential moderators of preference asymmetries as well as the variability of loss-aversion effects within and between studies. We find that loss aversion is manifest in product choice, but that it exhibits substantial variation across research contexts. Product-related variables (e.g., the category type), consumer characteristics (e.g., reference-point mechanisms), and particularly methodological decisions (e.g., model specifications) determine the observed degree of loss–gain disparity. Practical implications of the specific findings and opportunities for future research are discussed.