Loss aversion in post-sale purchases of two close substitutes

This paper employs micro-level data to identify consumers' loss aversion when choosing between two products that share the same price and observable product characteristics. The analysis focuses on post-sale observations where one product experienced a sale (a discounted price), but the price of the other product did not change. The paper contributes to the literature by demonstrating that a product benefits when its close competitor's sale is over. A loss-averse consumer would switch to the close substitute even when both products share the same price. (C) 2022 Elsevier B.V. All rights reserved.