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Heterogeneity of Gain-Loss Attitudes and Expectations-Based Reference Points

Goette, Lorenz and Graeber, Thomas and Kellogg, Alexandre and Sprenger, Charles (2020) Heterogeneity of Gain-Loss Attitudes and Expectations-Based Reference Points. . (Unpublished)

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This project examines the role of heterogeneity in gain-loss attitudes for identifying models of expectations-based reference dependence (Koszegi and Rabin, 2006, 2007) (KR). Different gain-loss attitudes lead to different signs for KR comparative statics. Failure to account for the known heterogeneity in gain-loss attitudes is a central confounding factor challenging prior tests of the KR model conducted under the assumption of universal loss aversion. We document heterogeneous treatment effects over gain-loss types in both an initial experiment and an exact replication. Recognizing heterogeneity over types allows us to both recover the KR model’s central predictions, and account for inconsistency across prior empirical tests.

Item Type:Report or Paper (Working Paper)
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URLURL TypeDescription Paper
Subject Keywords:Reference-Dependent Preferences, Rational Expectations, Personal Equilibrium, Endowment Effect, Expectations-Based Reference Points
Classification Code:JEL: D81, D84, D12, D03
Record Number:CaltechAUTHORS:20200727-101446329
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Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:104588
Deposited By: Tony Diaz
Deposited On:28 Jul 2020 16:27
Last Modified:28 Jul 2020 16:27

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