Online Reputational Loss Aversion: Empirical Evidence from StackOverflow.com

Abstract

Do people care equally about reputational gains and losses? We study this question by analyzing users’ contribution to online knowledge repositories, with data from StackOverflow.com, a website for user-curated technical questions and answers. Based on about 18% of all relevant activity on this website, we find that users post fewer answers after receiving upvotes as well as downvotes. Interestingly, users who receive downvotes post far fewer answers than users who receive upvotes. This suggests that reputational losses (downvotes) elicit a stronger reaction in users than reputational gains (upvotes), suggesting the presence of reputational loss aversion. Loss aversion as indicated by relative reaction to downvotes compared to upvotes is convex in reputation – it is stronger among users in the highest reputation segment (reputations above 50,000) and the lowest reputation segment (reputations in the 20k-30k range), and lower in the middle ranges. Our paper is novel in studying reputational loss aversion using observational data, compared to prior studies on loss aversion in choice settings using experimental data.

Keywords: Loss aversion, endowment effect, econometrics, panel data, knowledge management