Asymmetric Effects, Regulatory Focus, and Attribute Satisfaction: Mixed Experimental Evidence in Airline Overbooking Recovery

Abstract

Asymmetric effects and regulatory focus are two fundamental rules behind an individual’s judgment and motivation. While recent research on loss aversion presents inconsistent evidence, the literature on satisfaction studies provides little insight into the influence of regulatory systems on satisfaction. Moreover, literature regarding the potential interactions between asymmetric effects and regulatory focus is missing. In this paper, we examined the inconsistent evidence regarding loss aversion and various asymmetric effects in different types of regulatory focus at the attribute level. We conducted an experimental study in a setting of airline overbooking recovery in the Chinese airline industry. Our evidence shows that regulatory focus influences asymmetric effects. Participants with different types of regulatory focus have different priorities in recovery attributes and exhibit quite different patterns of asymmetric effects. We identify four different asymmetric effects and find one failure to present - an effect in our study. In addition, we present a regulatory focus-based dummy regression model, which is a more general method that nests previous research on attribute-satisfaction as a special case. The results, together with the newly proposed passenger classification (time fixed versus time flexible), underpin a more realistic assumption for future theory building and can thus help airline companies design a better recovery strategy for revenue management.

Keywords: regulatory focus, loss aversion, Kano model, recovery satisfaction, airline overbooking

JEL Classification: C93, D82, L80, L93, M39