The Research Of Loss Aversion On Ethical Violations Transactions

Previous research has generally shown that people are loss aversion, that is, losses loom larger than the same amounts of gains.This phenomenon is closely related to daily life, to carry out relevant research is helpful to solve the problem of non-rational decision problems. As an important part of the decision-making research area, loss aversion was found in the process of partly denying Expected Utility Theory and proposing the Prospect Theory. The mechanism of loss aversion was explained by the value function of Prospect Theory which is the dominant explanation theory. Additionally, the research on animals and children shows that loss aversion is a kind of instinctive behavior. But Route Theory proposed by Chinese scholars, which also provides a new study conducted direction of thinking, believe that the routes of gain or loss has relate to the loss aversion, while standard measure of feeling is the process of events.Literature reports on loss aversion mainly stored in regulated trading behaviors. These reports contain study of mechanism, influence factors and pattern of manifestation etc, while they didn’t make in-depth study on non-regulated trading behaviors such as transactions with moral anomie phenomenons. When dilemma between moral anomie and scholastic attainment arises, normal trading decisions for this reason turns to ethic decisions. The cognitive processes of human being are also influenced because of moral anomie, and then the loss aversion changes. In this study, experimentation was used to investigate that ethical violations transactions has influence on the loss aversion.Experiment I compared the bids of sellers and buyers in both moral illegaltrading behaviors and regulated trading behaviors. As a result, illegal trading behaviors reflected the loss aversion, which didn’t show in regulated trading behaviors. It confirms the difference between two kinds of loss aversion under two trading behaviors, which drew a conclusion that ethical violations transactions would enhance the loss aversion.Experiment II investigated the influences from different roles on the degree of psychological feeling in exam results, money and ethics. Finally, it found that the buyers mainly focused on test scores, while the sellers were most concerned with the money, but there is no different between the buyers and sellers.Experiment III enlarged the tested group from students to doctors. The result of experiment confirms that loss aversion has the characteristics of universality and similarity in groups. Bids from buyers and sellers differed in both students group and doctors group, and the loss aversion phenomenons arisen in the test didn’t reflect significant psychological differences among two groups of people.