Driving the Extra Mile: the Interplay Between Psychophysics and Loss Aversion in Determining Consumer Search Intensity

Ritesh Saini, George Mason University
Previously it has been demonstrated that consumers are (irrationally) influenced by relative-savings and not just absolute-savings in their decisions to extend searching for a better deal. In this paper we demonstrate that search intensity is also influenced by loss aversion. When prices are higher than the reference price (loss domain), consumers are more likely to engage in extended search, relative to when prices are lower, even when the absolute- and relative-savings remain unaltered. This effect is strongest in the vicinity of the internal reference price, and is enhanced when searching is risky. Consumers’ metacognitive understanding of this pattern is limited.
[ to cite ]:
Ritesh Saini (2008) ,"Driving the Extra Mile: the Interplay Between Psychophysics and Loss Aversion in Determining Consumer Search Intensity", in NA - Advances in Consumer Research Volume 35, eds. Angela Y. Lee and Dilip Soman, Duluth, MN : Association for Consumer Research, Pages: 703-704.