The Moderating Role of Social Networks in Loss Aversion: Testing How Consumption in Network Subcultures Can Strengthen Consumer-Brand Relationships”

The literature on consumers’ relationships with their brands emphasizes that, when people form relationships with brands that mirror their social relationships, the norms of social relationships are used as guiding principles in their interactions with brands. Recent experimental research has shown that the types of relationship norms present during an exchange can moderate the degree of loss aversion that consumers experience. Building on this research, I use an experimental approach to investigate the impact of social networks on loss aversion, and how purchase behavior embedded in a network setting (for example, group shopping or an at-home party), impacts the degree of loss aversion felt by a consumer. Results show that respondents in the socially embedded exchange condition have a higher degree of loss aversion, as demonstrated by the gap between their selling prices (willingness to accept) and buying prices (willingness to pay). With this research, I hope to build a stronger bridge between social network literature and decision making theory.

Citation:

Renee Ann Richardson (2009) ,"The Moderating Role of Social Networks in Loss Aversion: Testing How Consumption in Network Subcultures Can Strengthen Consumer-Brand Relationships”", in NA - Advances in Consumer Research Volume 36, eds. Ann L. McGill and Sharon Shavitt, Duluth, MN : Association for Consumer Research, Pages: 914-914.