A Study on the Application of Loss Aversion Theory from the Perspective of Behavioral Economics: Taking the Fields of Business and Education as Examples

Abstract

People's understanding of economic behavior has gradually deepened with the development of society and the economy. From the end of the 20th century to the beginning of the 21st century, behavioral economics has gradually attracted widespread attention as an emerging discipline. The discipline combines psychological and economic theories and methods to provide new perspectives for understanding human economic decision-making. This study aims to examine the utilization of the principle of loss aversion in behavioral economics within business and education contexts. Reviewing existing literature and case studies, this study will first introduce the basic concepts of behavioral economics and how they differ from traditional economics. It will then discuss the definition of loss aversion and its importance in behavioral economics. The study will also explore the application of loss aversion and its implications from business and education perspectives. In the business context, it will examine how brand loyalty and loss aversion affect trade-in strategies and dynamic pricing for enterprises; while in education, it will consider how leveraging the principle of loss aversion can improve students' academic performance and motivation. Finally, this study will summarize the benefits of applying the principle of loss aversion in practical settings and suggest potential areas for future research.