Title: From Loss Aversion to Loss Acceptance: How Casino Contexts Can Undermine Loss Aversion
Authors: Joseph P. Simmons and Nathan Novemsky
Although most research participants are loss averse and therefore unwilling to accept gambles that offer a 50% chance to win or lose the same amount, many people accept such gambles in casinos. To partially reconcile these empirical realities, we start with the notion that people are not loss averse for small amounts. Then, we suggest that gambling contexts may make otherwise large-seeming amounts seem small, thereby decreasing loss aversion and increasing people's willingness to gamble. In five studies, we show four ways by which casino contexts may increase gambling, and decrease loss aversion, by making wager amounts seem small.
Title: Neglect of Opportunity Costs in Consumer Choice
Authors: Shane Frederick, Nathan Novemsky, Jing Wang, Ravi Dhar, Stephen Nowlis
To properly consider the opportunity costs of a purchase, consumers must actively generate the alternatives that it would displace. The present research suggests that they do not routinely do so. Even under conditions promoting cognitive effect, merely reminding consumers that money would remain if a purchase were foregone enhances their consideration of outside goods, diminishes willingness to purchase a presented item, and increases preferences for cheaper options.