Reconciling Loss Aversion and Gain Seeking in Judged Emotions

Is the pain of a loss greater in magnitude than the pleasure of a comparable gain? Studies that compare positive feelings about a gain with negative feelings about a comparable loss have found mixed answers to this question. The pain of a loss can be greater than, less than, or equal to the pleasure of a comparable gain. We offer a new approach to test hedonic loss aversion. This method uses emotional reactions to the reference point, a positive change, and a negative change. When we manipulated the reference point (i.e., pleasurable and painful), two distinct patterns emerged. Pain surpassed pleasure (loss aversion) when the reference point was positive, and pleasure exceeded pain (gain seeking) when the reference point was negative. A reference-dependent version of prospect theory accounts for the results. If the carriers of utility are changes from a reference point—not necessarily the status quo—both loss aversion and gain seeking are predicted. Loss aversion and gain seeking can be reconciled if you take the starting point into account.