• Journal of Information Technology Applications and Management
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• v.22 no.2
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• pp.113-122
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• 2015

Collective intelligence can be an influential factor of decision-making based on collaboration and information exchange between individuals. Our study explores whether collective intelligence can mitigate the loss aversion effect, bias and error in human judgment, and collective intelligence in online communities can reduce the loss aversion effect. Our community settings display both individual-level and group-level loss aversion effect, investigate effective collective intelligence characteristics like investment commitment, participant experience. Using a multi-method approach our research comprises a web-based experiment with 100 participants investing 3 situations from a real-world community, data from a survey measuring loss aversion behavior of participants. The results suggest the loss aversion effect mitigates under the online-circumstance. Overall, our results suggest that, while collective intelligence mitigates the loss aversion effect, participants do not transfer these results to other settings.

• Management Science and Financial Engineering
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• v.17 no.1
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• pp.1-18
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• 2011

The present study provides a theoretical investigation on pioneering advantage based on reference dependence and loss aversion effect under prospect theory (Kahneman and Tversky, 1979). Behavioral explanations for pioneering advantage are provided from two different perspectives: one based on the prototypicality and the other on the utility uncertainty of the option. A pioneer brand creates the product category and makes a strong impression in customers' mind, and thus becomes the most representative or prototypical option of the category. In addition, the pioneer brand becomes the first option to be experienced by the majority of consumers in the product category, thus has the lowest level of utility uncertainty compared with the late movers. This study integrates the previous accounts for pioneering advantage by showing that consumers have higher preferences for the most prototypical and the least uncertain option based on loss aversion and reference dependence effect. This study suggests that firms should carefully analyze the consumers' loss aversion and perceived uncertainty and prototypicality of their products in order to develop effective market entry strategies.

• Korean Management Science Review
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• v.32 no.3
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• pp.55-70
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• 2015

The main objective of this study is to investigate the moderating roles of the competitor's pricing strategy and the degree of consumer's risk-aversion on perceived risk and perceived benefit in responding to price increases and package downsizing. Based on Prospect Theory, several prior researches find that consumers perceive increased price as more loss than package downsizing and perceive package downsizing as more benefit than increased price. We extend these behavioral economics approach using the reference effect of competitor's pricing strategy. We focus on consumer heterogeneity on risk-aversion, measure the degree of consumer's risk-aversion, and divide the consumers into two groups of high levels of risk-aversion vs. low levels of risk-aversion. We find that the firm's pricing strategies of both price increases and package downsizing do not significantly influence the perceived benefit for relatively low risk-aversion consumers. We find that when the firm reduce the package size, relatively high risk-aversion consumers perceived more benefit and had higher purchase intention compared to price increases. We also find that the competitor's pricing strategies do not significantly influence the consumer's response for relatively low risk-aversion consumers. For relatively high risk-aversion consumers, they perceived more loss when the firm has different pricing strategy from the competitor's.

• Science of Emotion and Sensibility
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• v.17 no.4
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• pp.101-108
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• 2014

The study of loss aversion has progressed. Specifically, Brenner et al. (2007) distinguished between possession loss aversion (PLA) and valence loss aversion (VLA) and explained PLA is the loss of cash or spot goods (money, apartment) and that VLA is the loss of tentative value (opportunity of oversea study, coupon). Also, they explored how the tendency of loss aversion was different between when possession loss was salience and when valence loss was outstanding. But, in our everyday life, it is more common that people face some economic situation where the gain and loss between possession and valence are competing. And, in this situation, they usually choose a better option based on their ordinary mind-set or self-focus rather than on which option has more benefit. Therefore, present research is that whether the tendency of loss aversion is different based on one's ordinary self-focus. Concretely, after priming promotion focus vs. prevention focus, participants should decide whether present occupation changes or not when gain and loss between possession and valence compete (income increase but oversea study chance decrease or income decrease but oversea study chance increase). As a result, there are more rate of changing job in promotion focusing condition than prevention focusing condition based on positive change irrespective of possession or valence. This result can have implication for marketing, consumer and advertisement psychology.

• Journal of the Korea Academia-Industrial cooperation Society
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• v.19 no.4
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• pp.433-438
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• 2018

This study examined the effects of ambiguity aversion on the self-protection and self-insurance efforts using a two-period model to consider the time difference between making an effort and occurring loss, which is in contrast with the existing one-period model. The loss follows a binary distribution while the distribution is ambiguous. The distribution depends on the state variable. First, the effort of ambiguity averse individuals is not always greater than that of ambiguity neutral ones. Second, the effects of absolute ambiguity aversion (AAA), which does not appear in one-period model, were observed. Not-increasing AAA is a sufficient condition to increase the efforts of ambiguity averse individuals compared to those of ambiguity neutral ones. In addition, the change in effort also depends on the probability function of the state. Lastly, the results hold even when the individual is risk neutral or risk loving. As a result, ambiguity aversion needs to be considered independently with risk aversion.

• Environmental and Resource Economics Review
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• v.27 no.2
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• pp.363-397
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• 2018

We study the impact of loss-aversion and the threat of critical damages from insufficient pollutant abatement, which we jointly call threshold concerns, on the outcome of international environmental agreements. We aim to understand whether concerns for a critical level of damages induce cooperation among countries faced with the well-known free-riding problem, and yield sufficient emission reductions to avoid exceeding the threshold. Specifically, we focus on loss-averse countries negotiating under the threat of either high or low environmental damages. Under symmetry, when countries display identical degrees of threshold concern, we show that such beliefs have a positive effect on reducing the emission levels of both signatories to the treaty and non-signatories, leading to weakly larger coalitions of signatories than in the absence of reference dependence. We then introduce asymmetry, by allowing countries to differ in the degree of concern about the damages. We show that stable coalitions are mostly formed by the countries with higher threshold concerns. When enough countries exhibit standard preferences, the coalition size may diminish, regardless of the degree of concern by the others.

• Journal of Navigation and Port Research
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• v.46 no.2
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• pp.121-133
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• 2022

The purpose of this study was to analyze decision-making regarding ship finance term selection from the behavioral finance perspective and to confirm if the causes and backgrounds of decision-making related to the term selection of ship finance are explicitly explained by behavioral finance theories. Additionally, through a case study, this study infers if decisions are irrational. Narrative and questionnaire responses on the selection of the ship finance period were obtained and analyzed from the behavioral finance perspective. Some shipping companies incur additional losses by choosing inappropriate ship-financing terms. This study applied behavioral finance theories, such as the certainty effect, availability heuristic, and loss aversion, to clearly explain the causes and background of such decision-making. Based on the results, it was found that behavioral finance theories impact ship financing decisions and errors related to behavioral finance can result in irrational decisions. Ship finance managers must be vigilant in preventing behavioral finance errors that can affect the decision-making term of ship finance.

• Asia Marketing Journal
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• v.10 no.1
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• pp.65-94
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• 2008

This study examines the generalizability of the existing research in an on-line auction situation which suggests that there exist a gap between buyer's willing-to-pay price(WTP) and seller's willing-to-sell price(WTS) about the same product due to the endowment effect and consumers' loss aversion propensity. At the same time, this study also identifies and examines the potential moderating factors for the effect such as product type and consumer's goal orientation based on existing theories about consumers' gain-loss heuristics. The results show that WTS is consistently higher than WTP, and that such gap gets more pronounced when the target product is hedonic vs. utilitarian and when consumers have prevention goals vs. promotion goals. Lastly, limitations and managerial implications of this study is discussed.

• The Journal of Asian Finance, Economics and Business
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• v.7 no.12
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• pp.635-645
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• 2020

This research was conducted to achieve several objectives and focus research was based on financial behavior theory and prospect theory as grounded theory e.g., investigate the financial decision-making behavior between financial and real assets investment, and confirm the relationship existing between herding behavior and overconfidence factors to the level of loss and regret aversion, and financial literacy into real assets investment decisions. The study used 220 real estate auction respondents as investor samples at the State Assets and Auction Service Office Makassar, South Sulawesi, Indonesia. Data was collected through the use of a questionnaire consisting of 23 questions to measure the variables. Moreover, the research data passed through several feasibility tests like the inner and outer modeling by Partial Least Square - Structural equation model (PLS-SEM) while the hypotheses formulated were also tested to determine the magnitude of the variable relationship. Through the use of the direct and intervening test, loss and regret aversion variables have a positive and significant effect while financial literacy variables have no significant effect. There is a slight difference in the decision-making process for real assets and financial assets investors. Investment decision making behavior in the financial assets sector requires less complicated decisions compared to the decisions related to real assets investments.

• Land and Housing Review
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• v.7 no.4
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• pp.217-223
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• 2016

PSM is widely used pricing tool in field by the reason of data collection convenience and analytical intuitiveness. However, In high involvement environment, strategic respondent bias influence in reducing the price. By using 3 empirical cases of LH apartment for sale, We found that latent consumers' recognition of the range of acceptable and the range of optimal price are lower than real estate agent representative respondents'. This phenomenon is considered loss aversion effect of prospect theory to reduce loss by reducing price, and more influenced in high involvement situation than latent consumer respondents'. Also we found PSM result using real estate representative data is more useful in real market than latent consumers data distorted by loss aversion effects. The meaning of this study is finding some limitation in PSM using consumer data generally used. In further study, development of PSM measurement tool to minimize the effect of strategic bias are need to be studied. Also some new approaches in reinterpretation of the range of acceptable price and the range of optimal price are need to be followed.