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Loss Aversion from the Perspective of Behavioral Finance and Its Application in Corporate Strategies: A Comparative Study of Apple Care and Tesla's Extended Warranty
- 1 Business School, Beijing Language and Culture University, Beijing, China
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Abstract
Loss aversion, as a core concept in behavioral finance, posits that individuals prefer to avoid losses rather than acquiring equivalent gains. This psychological bias has become a strategic asset for companies. This article examines the operational models of Apple Care and Tesla's extended warranty services to reveal how enterprises capitalize on cognitive biases. Through "active frame construction," companies amplify loss aversion, while "pseudo-passive transparency" leverages technology for algorithmic control. Research findings reveal that the essential difference between the two lies in the explicitness or implicitness of the exploitation form. Apple directly monetizes users' fears through an explicit framing effect, while Tesla creates a new form of 'data exploitation' through algorithmic black boxes under the guise of data transparency. The research suggests that a regulatory framework that links "transparency" and "accountability" should be established to prevent companies from transforming loss aversion from a profit tool into a engine for social welfare.
Keywords
Loss Aversion, Behavioral Finance, Business Ethics, Behavioral Exploitation, Transparency Empowerment
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Cite this article
Hong,Y. (2025). Loss Aversion from the Perspective of Behavioral Finance and Its Application in Corporate Strategies: A Comparative Study of Apple Care and Tesla's Extended Warranty. Advances in Economics, Management and Political Sciences,184,35-40.
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Volume title: Proceedings of ICMRED 2025 symposium: Effective Communication as a Powerful Management Tool
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