Testing loss aversion and diminishing sensitivity in review sentiment

Abhinav Sharma, Sangwon Park, Juan L. Nicolau

Research output: Journal article publicationJournal articleAcademic researchpeer-review

5 Citations (Scopus)

Abstract

This article analyzes the relationship between ratings and review sentiment by introducing, for the first time, the tenets of prospect theory. Specifically, we test loss aversion and diminishing sensitivity on a sample of 132,486 reviews and find that: first, negative deviations in ratings (receiving a service with worse performance than expected) bring about a higher impact on review sentiment than positive deviations of equal magnitude (receiving a service with better performance than expected), thus, confirming loss aversion; and second, regardless of whether the service received is better or worse than expected, variations in ratings closer to the reference point result in higher marginal impacts on sentiment than equivalent variations further away from the reference point, thus, proving diminishing sensitivity. These results have relevant theoretical implications related to the use of relative vs absolute measures and the cognitive bias involved, and managerial implications linked to meeting expectations and service recovery.

Original languageEnglish
Article number104020
JournalTourism Management
Volume77
DOIs
Publication statusPublished - Apr 2020

Keywords

  • Diminishing sensitivity
  • Loss aversion
  • Prospect theory
  • Rating
  • Review sentiment

ASJC Scopus subject areas

  • Development
  • Transportation
  • Tourism, Leisure and Hospitality Management
  • Strategy and Management

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