scholarly journals Contracts as Reference Points - Experimental Evidence

2008 ◽  
Author(s):  
Ernst Fehr ◽  
Oliver Hart ◽  
Christian Zehnder
Keyword(s):  
Experimental Evidence ◽  
Reference Points

scholarly journals Loss Aversion and Consumption Choice: Theory and Experimental Evidence

2015 ◽  
Vol 7 (2) ◽  
pp. 101-120 ◽  
Author(s):  
Heiko Karle ◽  
Georg Kirchsteiger ◽  
Martin Peitz
Keyword(s):  
Experimental Evidence ◽  
Loss Aversion ◽  
Consumer Choice ◽  
Rational Expectations ◽  
Choice Theory ◽  
Choice Model ◽  
Reference Points ◽  
Price Uncertainty ◽  
Theoretical Predictions

We analyze a consumer-choice model with price uncertainty, loss aversion, and expectation-based reference points. The implications of this model are tested in an experiment in which participants have to make a consumption choice between two sandwiches. Participants differ in their reported taste for the two sandwiches and in their degree of loss aversion, which we measure separately. We find that more-loss-averse participants are more likely to opt for the cheaper sandwich, in line with theoretical predictions. The estimates in the model with rational expectations are slightly more significant than those with naïve expectations. (JEL D11, D12, D84, M31)

scholarly journals Reference Points and Redistributive Preferences: Experimental Evidence

2015 ◽  
Author(s):  
Jimmy Charité ◽  
Raymond Fisman ◽  
Ilyana Kuziemko
Keyword(s):  
Experimental Evidence ◽  
Reference Points

scholarly journals Contracts as Reference Points - Experimental Evidence

2008 ◽  
Author(s):  
Ernst Fehr ◽  
Oliver D. Hart ◽  
Christian Zehnder
Keyword(s):  
Experimental Evidence ◽  
Reference Points

Detection, Identification, and Estimation of Loss Aversion: Evidence from an Auction Experiment

2014 ◽  
Vol 6 (1) ◽  
pp. 91-133 ◽  
Author(s):  
A. Banerji ◽  
Neha Gupta
Keyword(s):  
Willingness To Pay ◽  
Experimental Evidence ◽  
Loss Aversion ◽  
Reference Point ◽  
Value Distribution ◽  
Reference Points ◽  
Experimental Auction ◽  
Auction Design ◽  
Second Price Auctions

We provide a novel experimental auction design, in which (i) an exogenous decrease in the probability of winning, conditional on the bid, reduces the optimal bid of a loss averse agent whose reference point is expectations based; (ii) observed bid distributions uniquely identify the participants' latent value distribution and loss-aversion parameter. Experimental evidence affirms the presence of such reference points. We show that at the estimated magnitudes of loss aversion, (a) conventional Becker, DeGroot, and Marschak (1964) experiments may lead to large biases in estimated willingness to pay (which our design can correct for); and (b) first-price auctions may fetch moderately higher revenue, compared with second-price auctions. (JEL C91, D44, D82)

scholarly journals When the rich do (not) trust the (newly) rich: Experimental evidence on the effects of positive random shocks in the trust game

2021 ◽  
Author(s):  
Hernan Bejarano ◽  
Joris Gillet ◽  
Ismael Rodríguez Lara
Keyword(s):  
Experimental Evidence ◽  
Reference Points ◽  
Trust Game ◽  
Inequality Aversion ◽  
Study Behavior ◽  
Random Shock ◽  
The Rich ◽  
Positive Shock ◽  
Random Shocks ◽  
First Mover

We study behavior in a trust game where first-movers initially have a higher endowment than second-movers but the occurrence of a positive random shock can eliminate this inequality by increasing the endowment of the second-mover before the decision of the first-mover. We find that second-movers return less (i.e., they are less trustworthy) when they have a lower endowment than first-movers, compared with the case in which first and second-movers have the same endowment. Second-movers who received the positive shock return more than those who did not; in fact, second-movers who received the positive shock return more than second-movers who had the same endowment as the first-mover from the outset. First-movers do not seem to anticipate this behavior from second-movers. They send less to second-movers who benefited from a shock. These findings suggest that in addition to the distribution of the endowments the source of this distribution plays an important role in determining the levels of trust and trustworthiness. This, in turn, implies that current models of inequality aversion should be extended to accommodate for reference points if random positive shocks are possible in the trust game.

scholarly journals Can reference points explain wage rigidity? Experimental evidence

2021 ◽  
Vol 55 (1) ◽  
Author(s):  
Christian Koch
Keyword(s):  
Laboratory Experiment ◽  
Experimental Evidence ◽  
Reference Point ◽  
Good Reason ◽  
Reference Points ◽  
Experimental Results ◽  
Wage Rigidity ◽  
Fair Wage ◽  
Wage Cuts

AbstractI examine whether reference points can provide an explanation for rigid wages in recessions. Even though a recession provides a good reason to adjust wages downward, workers’ perception of a “fair wage” may depend on their previous wage, their reference point. Using a laboratory experiment, I test this idea by varying whether initially concluded contracts—and their stipulated wages—can serve as reference points. My experimental results show that with initial contracts workers punish wage cuts even in recessions, leading to considerable more rigid wages. Surprisingly, this is even true without an “objective” justification to feel entitled to initial contracts.

scholarly journals Contracts as Reference Points: Experimental Evidence

2008 ◽  
Author(s):  
Ernst Fehr ◽  
Oliver D. Hart ◽  
Christian Zehnder
Keyword(s):  
Experimental Evidence ◽  
Reference Points

scholarly journals Contracts as Reference Points—Experimental Evidence

2011 ◽  
Vol 101 (2) ◽  
pp. 493-525 ◽  
Author(s):  
Ernst Fehr ◽  
Oliver Hart ◽  
Christian Zehnder
Keyword(s):  
Experimental Evidence ◽  
Reference Points ◽  
Employment Relation ◽  
Trade Off ◽  
Ex Post ◽  
Ex Ante ◽  
John Moore

Hart and John Moore (2008) introduce new behavioral assumptions that can explain long-term contracts and the employment relation. We examine experimentally their idea that contracts serve as reference points. The evidence confirms the prediction that there is a trade-off between rigidity and flexibility. Flexible contracts—which would dominate rigid contracts under standard assumptions—cause significant shading in ex post performance, while under rigid contracts much less shading occurs. The experiment appears to reveal a new behavioral force: ex ante competition legitimizes the terms of a contract, and aggrievement and shading occur mainly about outcomes within the contract. (JEL D44, D86, J41)

How do memory modules differentially contribute to familiarity and recollection?

2019 ◽  
Vol 42 ◽  
Author(s):  
Olya Hakobyan ◽  
Sen Cheng
Keyword(s):  
Recognition Memory ◽  
Experimental Evidence ◽  
Subjective Experience ◽  
Target Article ◽  
Memory Modules ◽  
Familiarity And Recollection ◽  
Memory Contents

Abstract We fully support dissociating the subjective experience from the memory contents in recognition memory, as Bastin et al. posit in the target article. However, having two generic memory modules with qualitatively different functions is not mandatory and is in fact inconsistent with experimental evidence. We propose that quantitative differences in the properties of the memory modules can account for the apparent dissociation of recollection and familiarity along anatomical lines.

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