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Abstract
Kahneman and Tversky's (1979) prospect theory states, among other things, that losses loom larger than gains: losses are more unpleasant than equivalent gains are pleasant. As much research as this simple idea has generated, key questions remain. First, how fundamental is the losses-looming-larger effect: will it emerge under more minimal circumstances than previously tested? How does the actual experience of predominant losses or gains affect the losses-looming-larger effect? And can individuals hold conscious and nonconscious associations that are simultaneously inconsistent, with losses-looming-larger for one type of association but not the other?
Addressing these three questions required the use of nontraditional methods. In a series of three primary experiments, participants experienced slot machine spins in which symbols were paired with gain, loss, and neutral outcomes. After experiencing these pairings, participants took Implicit Association Tests (IATs) and answered explicit questions to measure the associations that they had formed with the gains and losses relative to the neutral outcome. In Experiments 1 and 2, negative implicit associations with the loss symbol were stronger than positive implicit associations with the gain symbol. Given that these lopsided associations were formed by minimal experience alone, with monetarily worthless points at stake, and without any deliberation or decision-making, this result underlines the fundamentality of the losses-looming-larger effect. In addition, it was found in Experiment 2 that the extent to which implicit associations reflected losses-looming-larger depended on the context of the slot machine experience: losses loomed implicitly larger than gains most when they were fewer in number (participants experienced a net-gain) and least when they were the predominant outcome (participants experienced a net-loss). In Experiment 3, a potential artifact and a peripheral hypothesis were pursued. Results served as a third demonstration of losses-looming-larger in implicit associations, showing that slot machine losses implicitly loom larger whether conceptualized from the perspective of a casino player or a casino owner. Moreover, implicit and explicit associations diverged, suggesting that the losses-looming-larger pattern may occur implicitly even when it is not observed explicitly. Finally, all findings were discussed in terms of both their limitations and implications.
