Asymmetric Perception of Gains vs Non-Losses and Losses vs Non-Gains: The Causal Role of Regulatory Focus

18 Pages Posted: 10 Jan 2012

See all articles by Simona Sacchi

Simona Sacchi

Università degli Studi di Milano-Bicocca

Luca Stanca

University of Milan, Bicocca - Department of Economics; Università degli Studi di Milano-Bicocca - Center for Interdisciplinary Studies in Economics, Psychology & Social Sciences (CISEPS); Università degli Studi di Milano-Bicocca - Department of Economics, Management and Statistics (DEMS)

Date Written: November 10, 2011

Abstract

Recent studies show that, while losses loom larger than equivalent non-gains, gains loom larger than equivalent non-losses. This finding, at odds with the loss aversion principle, has been interpreted within the framework of regulatory focus theory. In this study, we explore the causal effect of regulatory focus on the asymmetric perception of gains vs non-losses and losses vs non-gains. We examine the perceived effects of both hypothetical and actual changes in monetary wealth, while orthogonally manipulating framing, valence, and regulatory focus. We find a significant interaction between the three factors. The gain vs non-loss asymmetry in perceived satisfaction is stronger in promotion focus, while the loss vs non-gain asymmetry in perceived dissatisfaction is stronger in prevention focus. The results suggest that the effects of incentives framed in terms of (non) gains and (non) losses, depend on their congruence with the individual’s motivational state.

Keywords: loss-gain asymmetry, regulatory focus, prospect theory, subjective value

JEL Classification: C91, D81

Suggested Citation

Sacchi, Simona and Stanca, Luca, Asymmetric Perception of Gains vs Non-Losses and Losses vs Non-Gains: The Causal Role of Regulatory Focus (November 10, 2011). CISEPS Research Paper No. 10/2011. Available at SSRN: https://ssrn.com/abstract=1981897

Simona Sacchi (Contact Author)

Università degli Studi di Milano-Bicocca ( email )

Piazza dell'Ateneo Nuovo, 1
Milano, Milan 20126
Italy

Luca Stanca

University of Milan, Bicocca - Department of Economics ( email )

Piazza dell'Ateneo, Nuovo I
Milan 20126
Italy

Università degli Studi di Milano-Bicocca - Center for Interdisciplinary Studies in Economics, Psychology & Social Sciences (CISEPS) ( email )

Piazza dell'Ateneo Nuovo, 1
Milano, 20126
Italy

Università degli Studi di Milano-Bicocca - Department of Economics, Management and Statistics (DEMS) ( email )

Piazza dell'Ateneo Nuovo, 1
Milan, 20126
Italy

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