A Structural Analysis of Disappointment Aversion in a Real Effort Competition

  title={A Structural Analysis of Disappointment Aversion in a Real Effort Competition},
  author={David Gill and Victoria Prowse},
  journal={Labor: Personnel Economics eJournal},
We develop a novel computerized real effort task, based on moving sliders across a screen, to test experimentally whether agents are disappointment averse when they compete in a real effort sequential-move tournament. Our theory predicts that a disappointment averse agent, who is loss averse around her endogenous expectations-based reference point, responds negatively to her rival's effort. We find significant evidence for this discouragement effect, and use the Method of Simulated Moments to… 
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