Not using, but at least not losing A Study on the effect of Loss Aversion on the Product Disposition Behaviour of Consumers in Neglected Durable Products

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Consumers are not always be able to rationally decide on the disposing of products they no longer use. In a world in which a more sustainable and circular economy is of the highest priorities, understanding consumers’ disposition behaviour can help managers and others to motivate these consumers to dispose of neglected durable products in a way that benefits both the economy and the environment. To bring a start to investigating the influence of cognitive biases on product disposition and to answer the call for research looking into the relationship between the prospect theory and product disposal, this research focuses on the effect of the loss aversion bias on consumers’ disposal tendencies. Using an online scenario-based experiment with 222 Dutch respondents, it was concluded that loss aversion as proposed by the prospect theory has no significant effect on consumers’ motivation to dispose. Reference dependency, an important assumption of the prospect theory which holds that choice depends on the status quo, was expected to moderate this relationship. However, this was not found to be true. Two additional independent variables were also taken into account. Enlarging the sense of urgency was not found to alter consumers’ motivation to dispose. Emphasising the value a neglected product could have for others did have a positive effect on the motivation to dispose. This research was the first to study the effects of loss aversion on the disposal of neglected durable products in an experimental setting and even though it did not produce the expected results it does invite future research to further investigate the effects of loss aversion and other cognitive biases on product disposal.
Faculteit der Managementwetenschappen