Abstract

Framing Zero: When Losing Nothing is Better Than Gaining Nothing

Loss aversion predicts that a loss should be more aversive than an equivalent gain. When that amount is zero we show the opposite. That is, “gaining nothing” is more aversive than “losing nothing.” We show support for this effect across five studies. Studies one and two demonstrate the effect by replicating two well-known studies and varying the framing of zero. Study three examines the underlying affective mechanism. Study four explores financial decision-making, and study five demonstrates the difference between a small loss and gaining nothing is moderated by belief in risk-reward. These results have important implications for researchers and managers.

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