Power is generally de?ned as the ability to in?uence other people’s behavior, based on asymmetric control over valued resources. Recent theorizing and ?ndings suggest that power may indeed affect the decision making process. One of the most robust human biases in decision making is loss aversion, de?ned as the tendency for people to prefer avoiding losses over acquiring equivalent gains. That is, the anticipated value of a loss looms larger than the anticipated value of an objectively equivalent gain. Loss aversion has been associated with a number of important errors in decision making. Researchers have proved that cognitive perspective, motivation, emotion and characteristics of trade article can influence loss aversion.
With Chinese college students as participants, this study is to explore the influence of power on loss aversion. In Experiment 1, the result of the questionnaire survey showed that the higher power participants performed less loss aversion compared with lower power participants. This finding provides support for the hypothesis that power could reduces the loss aversion. Based on experiment 1, experiment 2 further investigates the causes of loss aversion by breaking apart the components of loss aversion to determine how power may reduce it: via positive results (gain), negative results (loss), or both. Across two different measures of anticipated value, power reduced the anticipated value of negative results. However, power didn’t increase the anticipated value of positive results. We conclude that power has an influence on loss aversion.
From a certain extent, the influence of the level of personal power on loss aversion just is
an automatic, unconscious process, This also means that participants really not consider “should” pay less attention on negative results. On the contrary, participants would neglect about negative results unconsciously provided high power mindset is activated. As a result, motivation of avoid negative results will be reduced. Ultimately, Neglect about negative results is a fundamental component of high power mindset.
This study explored the influence of the level of personal power on loss aversion, we can conclude that: (a) Loss aversion of high power individuals would likely be less than low power individuals; (b) Instead of over estimate value of gain, power reduce loss aversion by underestimate value of loss. In brief, high power individuals pay less attention on loss, and affect decision making process.
Key words
power /
loss aversion /
anticipated value
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