The review sentiment garden: Blossoming loss aversion and diminishing sensitivity across time and crisis

Abstract

Adopting an approach grounded in prospect theory, this article tests the principles of loss aversion and diminishing marginal sensitivity in hotel review sentiment. While prospect theory has been extensively tested in other areas, its application to review sentiment is novel, thereby extending our understanding of how hotel guests perceive and evaluate their service experiences. Simultaneously, this study examines whether the predictions of prospect theory hold to the same extent in post-Covid-19 reviews as they do in pre-Covid-19 reviews. The analysis is conducted on a sample of 416,756 reviews from 375 hotels in 14 European cities posted between 2000 and 2022. The findings show that a significant level of loss aversion and diminishing sensitivity characterizes reviews from both the pre-pandemic as well as post-pandemic periods. However, the effect of loss aversion becomes even more accentuated after Covid-19, with a gradual return to pre-pandemic levels.