Self-other decision-making differences in loss aversion: A regulatory focus perspective

Despite the revolutionary system of online booking, the decision-making process for booking hotels is still very stressful for customers, who face much uncertainty. The wide range of products and great volume of information result in significant cognitive overload. Therefore, online travel agencies (OTAs) try to reduce customers’ cognitive effort requirements and to induce effective decision making by triggering potential actions through perceived affordance. This study aims to explore the influence of perceived affordance on purchase decisions and postpurchase emotion in the context of OTAs. The findings show that explicit affordance and hidden affordance significantly affect impulsive buying, thus resulting in postpurchase discomfort and regret. Additionally, the outcomes of a multiple group analysis revealed a significant moderating effect of regulatory focus orientation on impulsive buying and postpurchase regret during an overall purchase process involving OTAs.

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Are the saving decision patterns of bank customers also clouded by psychological biases? Evidence from Ghana

Review of Behavioral Finance ◽

10.1108/rbf-05-2021-0094 ◽

2021 ◽

Vol ahead-of-print (ahead-of-print) ◽

Author(s):

Joseph Emmanuel Tetteh ◽

Christopher Boachie

Keyword(s):

Decision Making ◽

Loss Aversion ◽

Design Methodology ◽

Weighted Least Squares ◽

Least Squares Regression ◽

Individual Decision ◽

Content Type ◽

Saving Decisions ◽

The Individual ◽

Practical Implications

PurposeThis paper attempts to investigate the influence of psychological biases on saving decision-making of bank customers in Ghana.Design/methodology/approachIt employs weighted least squares regression to test the effect of psychological biases on savings decisions of bank customers.FindingsThe findings show that all the nine psychological biases, namely mental accounting, availability, loss aversion, representativeness, anchoring, overconfidence, status quo, framing effect and disposition effect employed for the study have a significant influence on saving decision of bank customers. The results depict that psychological biases are entrenched in the saving pattern of bank customers in Ghana.Practical implicationsFor policy purposes, the study recommends that bank customers need to enhance their knowledge of psychological biases in order to improve their gains from savings, and not to fall prey to these prejudices. The satisfied customer is a dependable source of bank viability and survival.Originality/valueTo the best of the knowledge of the author, this study provides the first empirical evidence of the influence of psychological biases on saving decisions of bank customers in Ghana. The findings of this study will enhance knowledge on the influence of psychological biases on individual decision-making and will accentuate the fact that the individual is not an entirely rational being.

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Regulatory focus and construal level theory on low-income consumer indebtedness: Evidence from an emerging market

International Journal of Emerging Markets ◽

10.1108/ijoem-08-2020-0870 ◽

2021 ◽

Vol ahead-of-print (ahead-of-print) ◽

Author(s):

Patrícia de Oliveira Campos ◽

Marconi Freitas da Costa

Keyword(s):

Decision Making ◽

Low Income ◽

Regulatory Focus ◽

Task Complexity ◽

Emerging Market ◽

Psychological Distance ◽

Construal Level Theory ◽

Construal Level ◽

Content Type ◽

Low Income Consumers

PurposeThis study aims to further analyse the decision-making process of low-income consumer from an emerging market by verifying the influence of regulatory focus and construal level theory on indebtedness.Design/methodology/approachAn experimental study was carried out with a design 2 (regulatory focus: promotion vs prevention) × 2 (psychological distance: high vs low) between subjects, with 140 low-income consumers.FindingsOur study points out that the propensity towards indebtedness of low-income consumer is higher in a distal psychological distance. We found that promotion and prevention groups have the same propensity to indebtedness. Moreover, we highlight that low-income consumers are prone to propensity to indebtedness due to taking decisions focused on the present with an abstract mindset.Social implicationsFinancial awareness advertisements should focus on providing more concrete strategies in order to reduce decision-making complexity and provide ways to reduce competing situations that could deplete self-regulation resources. Also, public policy should organize educational programs to increase the low-income consumer's ability to deal with personal finances and reduce this task complexity. Finally, educational financial programs should also incorporate psychology professionals to teach mindfulness techniques applied to financial planning.Originality/valueThis study is the first to consider regulatory focus and construal level to explain low-income indebtedness. This paper provides a deeper analysis of the low-income consumers' decision process. Also, it supports and guides future academic and decision-making efforts.

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Coordinating a Supply Chain with a Loss-Averse Retailer and Effort Dependent Demand

The Scientific World JOURNAL ◽

10.1155/2014/231041 ◽

2014 ◽

Vol 2014 ◽

pp. 1-12 ◽

Cited By ~ 2

Author(s):

Liying Li ◽

Yong Wang

Keyword(s):

Decision Making ◽

Supply Chain ◽

Loss Aversion ◽

Special Class ◽

Numerical Study ◽

Supply Chain Performance ◽

Channel Coordination ◽

Gain Loss ◽

Decision Making Behavior ◽

Dependent Demand

This study investigates the channel coordination issue of a supply chain with a risk-neutral manufacturer and a loss-averse retailer facing stochastic demand that is sensitive to sales effort. Under the loss-averse newsvendor setting, a distribution-free gain/loss-sharing-and-buyback (GLB) contract has been shown to be able to coordinate the supply chain. However, we find that a GLB contract remains ineffective in managing the supply chain when retailer sales efforts influence the demand. To effectively coordinate the channel, we propose to combine a GLB contract with sales rebate and penalty (SRP) contract. In addition, we discover a special class of gain/loss contracts that can coordinate the supply chain and arbitrarily allocate the expected supply chain profit between the manufacturer and the retailer. We then analyze the effect of loss aversion on the retailer’s decision-making behavior and supply chain performance. Finally, we perform a numerical study to illustrate the findings and gain additional insights.

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Factor Influencing Investor’s Decision Making in Indonesia: Moderating the Role of Locus of Control

International Journal of Business and Applied Social Science ◽

10.33642/ijbass.v6n4p6 ◽

2020 ◽

pp. 49-56

Author(s):

Febria Nalurita ◽

Farah Margaretha Leon ◽

Hamdy Hady

Keyword(s):

Decision Making ◽

Locus Of Control ◽

Loss Aversion ◽

Structural Equation ◽

Investment Decision ◽

Equation Modeling ◽

Investment Decision Making ◽

Market Factors ◽

Regret Aversion

This study aims to investigate the effect of loss aversion, regret aversion, and market factors, on investment decision making with the moderating role of locus of control. Data collection is done by distributing questionnaires. The survey was conducted on individual investors in the Indonesia Stock Exchange in Jakarta to obtain a sample of 281. This research uses the Structural Equation Modeling approach. The statistical tool used is LISREL 8.8. This study found that loss aversion, regret aversion, and market factors significantly influence investment decision making. Locus of control plays the role of moderation between loss aversion, regret aversion, market factors, and investment decision making. The novelty in this study reveals the research that needs to be done to encourage investors to make rational decisions and control the required rate of returns through their locus of control. This research helps investors to make decisions logically and rationally with an open mind, high-performance thoughts and positive actions for investment goals that produce positive returns.

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PENGAMBILAN KEPUTUSAN HUTANG PADA USAHA KECIL DAN MENENGAH (UKM) DI PULAU LOMBOK: SUATU PERSPEKTIF BEHAVIORAL FINANCE

JMM UNRAM - MASTER OF MANAGEMENT JOURNAL ◽

10.29303/jmm.v7i4.303 ◽

2018 ◽

Vol 7 (4) ◽

Author(s):

Siti Aisyah Hidayati ◽

Embun Suryani ◽

M Muhdin

Keyword(s):

Decision Making ◽

Behavioral Finance ◽

Loss Aversion ◽

Sampling Method ◽

Confirmation Bias ◽

Sampling Technique ◽

Factor Group ◽

Dominant Factor ◽

The Third ◽

Lombok Island

The purpose of this study is to find out what factors determine decision making of debt and what are the most dominant factors in decision making of debt for SMEs on the island of Lombok. This research is an explanatory research with quantitative approach. The population is all SMEs located in Lombok island. The sample is selected by Non probability sampling technique with a judgment sampling method where the SMEs that selected as samples are SMEs in handicraft industry of pottery and already exporting the products. Of the existing population, there are 25 (twenty five) SMEs that can be sampled. Respondents in this study are managers who also the owner of the SMEs. Data was collected using questionnaire. To achieve the research objectives, the data obtained will be processed according to needs using Factor Analysis.The results of this study indicate there are three groups of factors that determine decision making of debt, namely the First Factor Group consists of: Variable Excessive Optimism, Variable Overconfidence, Variable Confirmation Bias and Variable Aversion to sure loss. This factor is named Factor Overconfidence. The Second Factor Group consisted of Representativeness Variables, Avaibility Variables and Anchoring and Adjustment Variables. This factor is named the Avaibility Factor. The third factor group consists of Affect Variables and Aversion Loss Variables. This factor is named the Factor of Loss Aversion. The most dominant factor in determining debt decision making for SMEs in Lombok Island is the Overconfidence factor group consisting of Variable Excessive Optimism, Variable Overconfidence, Variable Confirmation Bias and Variable Aversion to sure loss .

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