Year: 2009
Type: report
Abstract: It is commonly accepted that consumers use a reference price when evaluating prices in a category.Researchers have extensively studied if existing data reveals loss aversion, i.e. that consumers put more emphasis on prices above the reference price (perceived losses) than prices below it (gains).Reference price and loss aversion are corner stones in Kahneman and Tversky's prospect theory.In this article conditions for loss aversive and gain seeking behavior are developed when the consumers' preferences are given by a random additive utility model and the choice model is McFadden's conditional multinomial logit.In the results prospect theory plays only a minor part and, perhaps surprisingly, the market share of the product is a key player.
Source: Aaltodoc (Aalto University)
Authors: Markku Kallio, Merja Halme
Language: English
Subfield: Marketing
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W2619820100