Effect of uncertainty‐dependent residential mobility on loss aversion

Abstract

The current research aimed to examine the relationship between residential mobility and loss aversion, a ubiquitous decision-making bias conceptualized in prospect theory. Combining correlational, experimental, and electroencephalography approaches, we tested the hypothesis that residential mobility may increase loss aversion. The results revealed a positive correlation between residential mobility and loss aversion (Study 1). These effects were moderated by individuals' residential mobility/stability mindsets. Behaviorally, we observed a positive association between residential mobility history and loss aversion among individuals with a high (vs. low) subjective uncertainty after manipulating their residential mobility mindset by priming them with a mobile or stable lifestyle (Study 2). On the neural level, we found that the mindset of residential mobility (vs. stability) enhanced the differential feedback-related negativity (FRN) modulations between the large-win and large-loss conditions among Chinese participants with a high subjective uncertainty (Study 3). In conclusion, residential mobility elevated loss aversion by enhancing feelings of subjective uncertainty. Our findings provide novel insights into how changes in the socioecological environment shape individuals' decision-making bias.