Reversed loss aversion in crowdsourcing contest

Crowdsourcing contest is an effective means for firms to outsource tasks online to a large group of solvers in order to obtain creative solutions. This study investigates loss aversion of solvers in crowdsourcing contests. An experiment was conducted, and reversed loss aversion was identified for solvers, suggesting that solvers experience more happiness from the gains when they win the contest than the pain from the equivalent losses when they fail. The results also suggested that solvers experience higher reversed loss aversion for ideation contests than for expertise-based contests. We then investigated the effects of reversed loss aversion from a game theory perspective. The solutions showed that solvers’ effort level is greater with reversed loss aversion, while the optimal reward for the contest remains the same. In light of our findings, sponsors should conduct contests to solve ideation problems in which the solvers are loss averse reversed and will input more effort. Diversified business models could be developed by crowdsourcing platforms to match solvers and different crowdsourcing tasks.