Do Loss-Averse Consumers Sweat Paying Extra? Evidence From Electrodermal Activities Studies

Loss aversion is a human tendency, which is used to explain the reference price effect. We critically examined the loss aversion account of the reference price effect in accommodation decisions by adopting a mixed-method approach. Physiological reactions to losses were captured by electrodermal activities and trait loss aversion was measured by a behavioral economic task. We tested whether trait loss aversion predicts individuals’ susceptibility to the reference price effect in lodging decisions and whether physiological reactions mediate the effect. We explored the moderating role of travel use history and established a methodological triangulation among the three loss-aversion measures: trait, hotel choice, and physiological. The physiological results gave support to the role of emotions in the reference price effect. Our findings provide valuable insights for managers in addressing asymmetric pricing, particularly highlighting the importance of monitoring customer emotional fluctuations during price presentation and segmenting the market based on travel experience.