Loss aversion in hotel choice: Psychophysiological evidence

Abstract

The authors investigate the psychophysiological correlates of loss aversion in hotel choice. Consumers are frequently found reluctant to shift their choice to a subsequent option from their first encountered hotel. The concept of loss aversion can explain this ordering effect. However, there is a knowledge gap about how exactly loss aversion leads to such inertia. The present study provides a more direct measurement of this decision process by examining electrodermal activities and reaction times when consumers are making hotel choices. The choice data provides evidence of reluctance to switch to higher quality hotels, though not to lower rated properties. Such a switch is found emotionally arousing as indicated by consumers’ electrodermal activity. The reaction time data further suggests that the swiftness of such decisions to “trade up” is associated with the greater vigilance and attention, rather than a cognitive conflict caused by the difficult tradeoff between the hotels.