How beliefs influence the relative magnitude of pleasure and pain

Loss aversion is an economic assumption about utility—people value giving up a good more than they value getting it. It also has hedonic meaning—the pain of a loss is greater in magnitude than the pleasure of a comparable gain. But value and pleasure are not necessarily identical. We test the hedonic interpretation of loss aversion in experimental markets. With hedonic forecasts, sellers imagine the pain of losing their endowment, and buyers imagine the pleasure of being endowed. With hedonic experiences, sellers rate the pleasure of having the endowment, and buyers rate the pain of being without it. Contrary to loss aversion, predicted pleasure is greater in magnitude than predicted pain, and experienced pleasure surpasses experienced pain. We show that the relative magnitude of pleasure and pain depends on beliefs about the likelihood of outcomes, as well as utilities. Surprise makes gains more pleasurable and losses more painful. With surprising gains and expected losses, pleasure can surpass pain. But when gains and losses are equally likely (or losses are surprising and gains are expected), the opposite pattern can occur. Finally, within‐group and between‐group prices are significantly correlated with hedonic experiences. Sellers who feel better with their endowments assign higher selling prices, and buyers who feel worse about the absence of endowment assign higher buying prices. Despite the fact that hedonic experiences deviate from loss aversion, these emotions predict the endowment effect. Copyright © 2009 John Wiley & Sons, Ltd.     

The Seller's Sense: Buying–Selling Perspective Affects the Sensitivity to Expected Value Differences

Previous work comparing pricing decisions by buyers and sellers has primarily focused on the endowment effect, the phenomenon that selling prices exceed buying prices. Here, we examine whether pricing decisions by buyers and sellers also vary in sensitivity to differences between objects' expected values (EVs). Both a loss‐aversion account (which posits that losses are weighted more heavily than gains) and a loss‐attention account (which posits increased attention to a task when it involves possible losses) predict that pricing decisions by sellers should exhibit higher sensitivity. The latter, however, additionally predicts that this pattern should only emerge under certain conditions. In studies 1 and 2, we reanalyzed two published datasets in which participants priced monetary lotteries as sellers or buyers. It emerged that sellers showed greater EV sensitivity (defined as the rank correlation between the set price for each lottery and its EV) except in a condition with an extended deliberation time of 15 seconds. In study 3, the buyer–seller difference in EV sensitivity was replicated even when the pricing task was presented repeatedly, while in study 4, it was eliminated when buying and selling trials were randomly mixed. The reduction of the “seller's sense” in long deliberation and mixed trials settings supports an attentional resource‐based account of the differences between sellers and buyers in their EV sensitivity. Copyright © 2016 John Wiley & Sons, Ltd.     

买卖交易中谈判者角色影响谈判结果的机制

现实生活中的谈判通常发生在特定的社会情境中, 谈判者也总在扮演着某种角色。本研究探索了买卖交易谈判中谈判者角色影响谈判结果的作用机制。研究提出了一个关于谈判者角色诱发框架效应的理论模型, 然后通过两个模拟谈判实验对这一模型进行验证。实验1表明, 买家知觉到的馅饼大于卖家知觉到的馅饼, 且谈判者知觉到的馅饼在谈判者角色与谈判者绩效间起部分中介作用。实验2发现, 即使保留买家与卖家的角色标签, 如果剥离了金钱作为交易介质这一重要特征, 两个谈判角色知觉到的馅饼也没有差异。研究揭示了谈判者角色影响谈判结果的作用机制, 对谈判者如何利用情境因素取得更好的谈判结果具有实践意义。     

The differential processing of price in gains and losses: the effects of frame and need for cognition

Perhaps the most fundamental principle of decision theory is that more money is preferred to less: the principle of desired wealth. Based on this and other principles such as reference dependence and loss aversion, researchers have derived and demonstrated mental accounting (MA) rules for multiple outcome situations. Experiment 1 tested the invariance of the desired wealth principle and two mental accounting rules (mixed gain, e.g. $100 gain and a $50 loss; mixed loss, e.g. $100 loss and a $50 gain) across types of decision maker and frame. The desired wealth principle and the MA rule for mixed gains were found to vary depending upon (1) the thoughtfulness of the decision maker (need for cognition, NC), and (2) the frame used to describe gains and losses (e.g. a gain of $x versus a gain of y%). The MA rule for mixed losses, however, was found to be immune to framing effects, even among people who are generally less thoughtful. The differential processing of gains and losses across frames (dollar versus percentage) and individuals (less versus more thoughtful) was tested further in Experiment 2 where evaluations of mixed losses were made at the level of the gestalt as well as the constituent (the gain and the loss being evaluated separately). Framing effects were evidenced only among subjects lower in NC and only when the constituent gain was evaluated. Evaluations of the overall mixed loss and the constituent loss were comparable across situation and individual, suggesting that losses motivate greater processing among people otherwise inclined toward cognitive miserliness. Copyright © 2000 John Wiley & Sons, Ltd.     

Constructing preference from experience: the endowment effect reflected in external information search

People often attach a higher value to an object when they own it (i.e., as seller) compared with when they do not own it (i.e., as buyer)--a phenomenon known as the endowment effect. According to recent cognitive process accounts of the endowment effect, the effect is due to differences between sellers and buyers in information search. Whereas previous investigations have focused on search order and internal search processes (i.e., in memory), we used a sampling paradigm to examine differences in search termination in external search. We asked participants to indicate selling and buying prices for monetary lotteries in a within-subject design. In an experience condition, participants had to learn about the possible outcomes and probabilities of the lotteries by experiential sampling. As hypothesized, sellers tended to terminate search after sampling high outcomes, whereas buyers tended to terminate search after sampling low outcomes. These differences in stopping behavior translated into samples of the lotteries that were differentially distorted for sellers and buyers; the amount of the distortion was predictive of the resulting size of the endowment effect. In addition, for sellers search was more extended when high outcomes were rare compared with when low outcomes were rare. Our results add to the increasing evidence that the endowment effect is due, in part, to differences in predecisional information search.     

Reference Points and Omission Bias

Subjects were asked to evaluate the choice of options leading to known outcomes, or to say how they would feel about a chance outcome, in hypothetical decisions. We independently manipulated the value of the status quo and the assignment of the better or worse outcome to an act or an omission. Acts leading to the worse outcome were always considered worse than omissions leading to the worse outcome. This act-omission difference was reduced or reversed for the better outcome. Most experiments showed an overall bias toward omissions (combining better and worse). Little evidence was found for greater omission bias for losses relative to the status quo than for gains. A bias toward maintaining the status quo itself was found, however, independently of omission bias. Most of the results can be explained by norm theory and by loss aversion, but other possible accounts are inconsistent with the results.     

The framing of negotiations: Contextual versus task frames

The purpose of this paper was to examine sources of the framing bias. While previous research has focused on task-responsive (experimentally manipulated) frames, it was argued that the context of the task may also frame the decision. Citing previous empirical studies which illustrated that buyers systematically outperformed sellers in symmetrical, negotiation simulations, it was suggested that the role of a participant may influence performance, independent of the task-characteristic demands. A study was conducted using an economically symmetrical negotiation simulation. Results indicated that negotiators positively framed by task characteristics completed more transactions, independent of the presence or absence of role-relevant information. When role-relevant information was absent, negotiators negatively framed by task characteristics completed transactions of greater mean value. When role-relevant information was present, buyers completed transactions of greater mean value than sellers, while task characteristics had no effect on mean transaction value. Implications of these results and directions for continued study were discussed.     

Regulatory Focus Theory: Implications for the Study of Emotions at Work

Previous theory and research have shown that people have two distinct self-regulatory foci. When promotion focused, people are motivated by growth and development needs in which they attempt to bring their actual selves (their behaviors and self-conceptions) in alignment with their ideal selves (self-standards based on wishes and aspirations of how they would like to be). When prevention focused, people are responsive to security needs in which they try to match their actual selves with their ought selves (self-standards based on felt duties and responsibilities). Strategically, eagerness or ensuring gains predominate for promotion-focused persons, whereas vigilance or ensuring nonlosses predominate for prevention-focused persons. People's regulatory focus influences the nature and magnitude of their emotional experience. Promotion-focused people's emotions vary along a cheerful-dejected dimension, whereas prevention-focused people's emotions vary along a quiescent-agitated dimension. We consider the implications of the relationship between regulatory focus and emotions for such topics as person/organization fit, goal-setting theory, expectancy-valence theory, behavioral decision theory, and employee resistance to organizational change. Possible antecedents of employees' regulatory focus also are discussed.     

Framing and Risky Choice as Influenced by Comparison of One's Achievements with Others: The Case of Investment in the Stock Exchange

Based on social comparison theory and equity theory, the first aim of this study was to examine the hypothesis that framing is affected not only by previous success or failure, but also by comparisons with relevant others' outcomes as well. The second aim of the study was to examine prospect theory propositions that people are risk aversive for gains and risk seeking for losses. A total of 220 students were administered scenarios that described outcomes of their stock investments (gains or losses). In addition, they were provided with information about their close friends' outcomes investing in similar stocks. Generally, the hypothesis regarding the influence of others' outcomes on framing was confirmed. However, results showed that, in contradiction to prospect theory, gain framing rather than loss framing was related to risk seeking behavior. Specifically, in the gain framing situation, the readiness to take risks was highest when the others' outcomes were equal to those of the participants. The limitations of prospect theory are discussed.     

Individual Differences in Delay Discounting: Differences are Quantitative with Gains,but Qualitative with Losses

Research on delay discounting and inter‐temporal choice has yielded significant insights into decision making. Although research has focused on delayed gains, the discounting of losses is potentially important in precisely those areas where the discounting of gains has proved informative (e.g., substance use and abuse). Participants in the current study completed both a questionnaire consisting of choices between immediate and delayed gains and an analogous questionnaire consisting of choices between immediate and delayed losses. For almost all participants, the likelihood of choosing the delayed gain decreased with increases in the wait until it would be received. In contrast, when losses (i.e., payments) were involved, different participants showed quite different patterns of choices. More specifically, although the majority of the participants became increasingly likely to choose to pay later as the delay was increased, some participants appeared to be debt averse, in that they were more likely to choose the immediate payment option when the delay was long than when it was brief. These debt‐averse participants also were more likely to choose to wait for a larger delayed gain than other participants and scored lower on Impulsiveness than those who showed the typical pattern of discounting delayed losses. Taken together, these results suggest that in the case of delayed gains, people differ only quantitatively (i.e., in how steeply they discount), whereas in the case of delayed losses, people differ qualitatively as well as quantitatively, contrary to the common assumption that a single impulsivity trait underlies choices between immediate and delayed outcomes. Copyright © 2016 John Wiley & Sons, Ltd.     

Overpredicting and Underprofiting in Pricing Decisions

This research examines sellers' price‐setting behavior and discovers a naturally occurring mismatch between sellers and buyers: Sellers who make a price decision often consider alternative prices and engage in the joint evaluation mode, whereas buyers who make a purchase decision see only the finally set price and are in the single evaluation mode. This mismatch in evaluation modes leads sellers to overpredict buyers' price sensitivity and underprice their products. However, these effects apply only to products unfamiliar to buyers and without salient reference prices and can be alleviated if sellers are encouraged to mimic single evaluation when making pricing decisions. These propositions are empirically tested and verified. Copyright © 2011 John Wiley & Sons, Ltd.     

Applying prospect theory to pilot weather-related decision-making: The impact of monetary and time considerations on risk taking behaviour

One of the key findings of prospect theory is that people tend to treat potential gains differently to potential losses. Consistent with earlier findings across a range of areas, pilots were risk averse when faced with an uncertain situation involving monetary gains and risk seeking when faced with a monetary loss. Prospect theory has largely been used to explore monetary decision-making; however, “time” is potentially a more important consideration for pilots than money. For example, how much time can be flown with the current fuel onboard. It was found that pilots' decision behaviour changed when faced with a decision involving time, with pilots risk averse for both a time gain and a time loss situation. Pilots appeared to prefer to know precisely the time required for a journey, rather than take a gamble on a potential short cut. Evidence also suggests pilots were more likely to take risks in situations that they perceive they have more control over (e.g. air traffic delays) compared to dynamic weather-related events. There was some evidence to suggest pilots do not consider a decision in terms of an end state, but rather in terms of losses and gains from their current state. The final part of the study found evidence that it may be possible to predict pilot risk taking behaviour using self-report decision frames.     

The persuasive effects of framing messages on fruit and vegetable consumption according to regulatory focus theory

According to Regulatory Focus theory (RFT), outcomes in persuasive messages can be framed in four different ways, as gains, non-gains, losses or non-losses. In study 1, the persuasiveness of all four frames was compared and the presence/absence effect that was expected on the basis of the feature-positive effect was verified: Statements about present outcomes (gain, loss) were more persuasive than those about absent outcomes (non-gain, non-loss). However, this study failed to support the prediction that a gain-framed message would be more persuasive than a loss-framed message when promoting a prevention behaviour. Study 2 was designed to examine the latter finding. It was hypothesised that the threat posed by the loss-framed message in study 1 was too low to elicit a defensive reaction. Therefore, in study 2, the personal relevance of the gain and the loss framed message was manipulated. Consistent with predictions, the gain-framed message was more persuasive than the loss-framed message, but only when the message was personalised to increase self-relevance. Moreover, the effect was due to a significant drop in persuasion in the loss condition, probably caused by a defensive reaction. These data shed a new light on the findings of past framing studies.     

A new spin on losses looming larger than gains: asymmetric implicit associations from slot machine experience

Kahneman and Tversky's prospect theory states, among other things, that losses loom larger than gains. As much research as this simple idea has generated, key questions remain. How fundamental is the losses‐looming‐larger effect: will it emerge under more minimal circumstances than previously tested and will it manifest in implicit associations? And how does the actual experience of predominant losses or gains affect the losses‐looming‐larger effect? In two experiments employing non‐traditional methods, participants experienced slot machine spins in which symbols were paired with gain, loss, and neutral outcomes. After experiencing these pairings, participants took Implicit Association Tests (IATs). In Experiment 1, implicit associations formed by the minimal experience of the slot machine were lopsided: negative associations with the loss symbol were stronger than positive associations with the gain symbol. In addition, it was found that the extent to which losses loomed larger depended on the context of the slot machine experience, with losses looming implicitly larger than gains most when they were fewer in number (participants experienced a net‐gain) and least when they were the predominant outcome (participants experienced a net‐loss). Finally, in Experiment 2, a potential artifact was ruled out and a replication obtained by showing that slot machine losses implicitly loom larger whether conceptualized from the perspective of a casino player or a casino owner. Copyright © 2008 John Wiley & Sons, Ltd.     

Chapters of Our Lives: Life Narratives of Midlife and Older Australian Women

A narrative approach was used to explore whether women perceive their later years as a time of loss, stability, or gain, and the explanations they give for their perceptions. Life review interviews were held with 20 married or previously married mothers aged 60–65 living in lower-income suburbs of Sydney, Australia. Participants were asked to consider their life story as a book, to divide the book into chapters, and to entitle each chapter. Two types of gain narrative accounted for 70% of the stories: one (breakouts) described gains that resulted from the womans own actions, and the other (stress relief) described gains from role changes and the passage of time. A further 20% described continuing contentment with their lives, and 10% of the accounts described later life in terms of losses. The findings suggest that one reason for the later life satisfaction regularly found by surveys of older adults may be the disappearance or diminishment of previous life stressors. As part of a planned cohort comparison, similar interviews were held with women aged 50–55 and 40–45. An additional category of ongoing stress was required to accommodate their narratives.     

Asymmetric Perception of Gains versus Non‐losses and Losses versus Non‐gains: The Causal Role of Regulatory Focus

Recent studies show that, while losses loom larger than equivalent non‐gains, gains loom larger than equivalent non‐losses. This finding has been interpreted within the framework of regulatory focus theory. In this study, we highlight the importance of considering the motivational focus independently of the framing and the valence of outcome, thus exploring the causal effect of regulatory focus on the asymmetric perception of gains versus non‐losses and losses versus non‐gains. In two studies, we examine the perceived effects of either actual or hypothetical changes in monetary wealth, while orthogonally manipulating framing, valence, and regulatory focus. We find a significant interaction between the three factors. The gain versus non‐loss asymmetry in perceived satisfaction is stronger in promotion focus, whereas the loss versus non‐gain asymmetry in perceived dissatisfaction is stronger in prevention focus. The results suggest that the effects of incentives framed in terms of (non)gains and (non)losses depend on their congruence with the individual's motivational state. Copyright © 2013 John Wiley & Sons, Ltd.     

Individual differences in need for cognition and decision making in the Iowa Gambling Task

Differences in decision making between individuals differing in Need for Cognition (NFC) are examined using the Iowa Gambling Task (IGT). Previous work using normative one time decisions suggests that individual low in NFC process gains and losses differently than those high in NFC and are more susceptible to decision biases. The IGT is a popular laboratory task that involves making risky decisions from experience involving both gains and losses. In the first experiment, low NFC participants performed significantly worse than the high NFC participants. A second experiment designed to examine the nature of these differences provides evidence that low NFC participants place more importance on gains as opposed to losses when performing the IGT. Results are discussed in light of previous work suggesting that low NFC participants place more importance on losses in mixed outcome decisions.     

The Preference for Gain Frames in Consumer Decision Making.

The way that choices are framed or presented to consumers may exert a significant impact on preferences. With few exceptions, past experiments have always framed choices for decision makers. Six studies examined how people themselves frame ambiguous events. Using a scenario format, Study 1 demonstrated that subjects interpreted paying back a loan as a gain rather than as a loss. Study 2 replicated this finding with a methodology where subjects actually received a loan of real money from the experimenter. Study 3 showed that the tendency to view paying back a loan as a gain was greater when the loan was for oneself rather than another person. Study 4 replicated the initial finding using a choice dilemma similar to those used by Tversky and Kahneman (1981). Studies 5 and 6 showed that people view selling a possession as a gain. However, Study 5 also showed that buyers do not display this tendency. These data suggest that the tendency to frame actions as gains will be moderated by role expectations and the bias to view one's actions in a positive light.     

Do Measures of Executive Functioning and Manipulation of Ego Depletion Predict How University Students Discount Probabilistic Gains and Losses?

Discounting occurs when the subjective value of an outcome is altered because the outcome is delayed or uncertain. Previous research has suggested that how individuals discount delayed gains is related to executive functioning. The present study attempted to extend this relationship to discounting of probabilistic gains and losses, and to examine whether diminishing cognitive resources would impact how participants discounted monetary outcomes. In Experiment 1, university students completed an executive function measure and then a probability-discounting task that involved the hypothetical sum of either $1,000 or $100,000 framed as either a gain or a loss. The executive function of organization was a significant predictor of how participants discounted all four outcomes while motivational drive predicted discounting of losses, but not gains. In Experiment 2, participants completed the same measures with the addition of an ego-depletion task to deplete cognitive resources before making discounting decisions. The executive function of motivational drive and empathy were significant predictors of how participants discounted both loss outcomes. The results suggest that discounting of monetary outcomes is related to the executive function of organization for gains and motivational drive, and empathy for losses. They also support the notion that the discounting of gains may be a distinct process from the discounting of losses.     

Selective exposure and decision framing: The impact of gain and loss framing on confirmatory information search after decisions

When people make decisions, they often prefer to receive information that supports rather than conflicts with their decision. To date, this effect has mainly been investigated in the context of decisions about gains, whereas decisions about losses have received less attention. Based on Prospect Theory, we expected information search to be differently affected by whether people previously have decided about gains or losses. Three studies have revealed that selectivity of information search is stronger after gain-framed rather than after loss-framed decision problems. An investigation of the underlying psychological processes revealed that gain decisions are made with increased subjective decision certainty (i.e. they are easier and less effortful to make), which in turn systematically increases confirmatory information search.