The Bright Side of Dread: Anticipation Asymmetries Explain Why Losses are Discounted Less than Gains

Abstract

The dread of future losses weighs more heavily than the pleasure of anticipating future gains, even after controlling for loss aversion. This happens because waiting for a gain is a mixed emotional experience that is both pleasurable (due to savoring) and painful (due to impatience), whereas waiting for a loss is a more unidimensional painful experience (dread). Anticipation predicts time preference, such that the more people enjoy anticipating [dread] an event, the more they prefer to delay it [get it over with]. In combination, these findings explain and mediate the "sign effect" in discounting, i.e., the fact that losses are discounted less than gains. Furthermore, this pattern of results remains robust even after controlling for loss aversion.