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When Gains Loom Larger Than Losses

Fieke Harinck; Eric Van Dijk; Ilja van Beest; Paul Mersmann

Leiden University, Leiden, The Netherlands

Previous research has generally shown that people are loss averse; that is, they weigh losses more heavily than gains. In a series of three experiments, we found that for small outcomes, this pattern is reversed, and gains loom larger than losses. We explain this reversal on the basis of (a) the hedonic principle, which states that individuals are motivated to maximize pleasure and to minimize pain, and (b) the assumption that small losses are more easily discounted cognitively than large losses are.

DOI

10.1111/j.1467-9280.2007.02031.x

Volume

18 (12)

Pages

1099-1105

Language

en

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