Framing an outcome as a loss causes individuals to expend extra effort to avoid that outcome (Tversky & Kahneman, 1991). Because classroom performance is a function of student effort in search of a higher grade, we seek to use loss aversion to encourage student effort. This field quasi-experiment endows students with all of the points in the course up front, then deducts points for each error throughout the semester. Exploiting 2 course sequences in the business school of a midwestern university, a control for domain-specific knowledge, this study examines the impact of loss aversion when controlling for the student's knowledge in a specific subject. This quasi-experiment indicates that students perform 3Ϫ4 percentage points better when controlling for student ability and domain knowledge (148 subjects). This result is significant at the 1% level in our most robust specification (p ϭ .0020). This result is confirmed by a specification including 4 courses and controlling for student characteristics (217 subjects, p ϭ .0190).
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