Loss Aversion in Post-Sale Purchases of Consumer Products and Their Substitutes

This paper considers the measurement of consumer loss aversion in product markets. We introduce a test based on a substitution effect, focusing on how the end of a sale affects sales not of the good itself, but a substitute good. Such an effect cannot be easily confounded with consumer stockpiling. Using a unique dataset from an online hardware retailer, we find evidence consistent with consumer loss aversion. Moreover, we find that less experienced consumers suffer a more prominent loss aversion bias compared to more experienced consumers.