Loss Aversion on Consumer Purchase Decisions and Investment Behaviors

Jiaze Xu

doi:10.54097/g3bz6859

Authors

Jiaze Xu

DOI:

https://doi.org/10.54097/g3bz6859

Keywords:

Behavioral economics, loss aversion, consumption, investment.

Abstract

Loss aversion is an important concept in behavioral economics. This research will first introduce the basic information of loss aversion and then explore the impact of it on consumer purchase decisions and investment behaviors. As for the consumer choices, price sensitivity, brand loyalty, purchase timing, and post-purchase regret are all significantly influenced by loss aversion. While in investment behaviors, loss aversion leads to conventional asset allocation, inadequate trading strategies and anxiety-driven market fluctuations. The study examines how loss aversion affects both consumers and investors on financial decision-making based on previous academic achievements. Furthermore, the study offers some suggestions to improve the adverse effects caused by loss aversion, emphasizing the need for better financial education and strategic behavioral intervention. Although loss aversion inevitably influences people’s choices in life, understanding its mechanism and influence can still help people and organizations make better financial decisions, enhance economic results, and stabilize the market.

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