EXAMINING LOSS AVERSION FOR QUALITY VERSUS LOSS AVERSION FOR PRICE

This paper focuses on an important issue in brand choice: Is loss aversion for quality greater than loss aversion for price, or vice versa? Using existing research findings as a starting point, the study shows that it is important to use a common metric before reaching conclusions about the role of relative loss aversion for price and quality on a dependent variable of interest. Based on this procedure, the paper reexamines the conclusion on the relative loss aversion for price and quality from the existing research. In addition, using numerical simulations, the paper illustrates some boundary conditions of the relative magnitudes of loss aversion for price and quality. Managerial and research implications of the findings are delineated.