Expectations as Endowments: Evidence on Reference-Dependent Preferences from Exchange and Valuation Experiments

  title={Expectations as Endowments: Evidence on Reference-Dependent Preferences from Exchange and Valuation Experiments},
  author={Keith M. Marzilli Ericson and Andreas Fuster},
  journal={Behavioral \& Experimental Economics eJournal},
  • K. EricsonA. Fuster
  • Published 19 May 2010
  • Economics
  • Behavioral & Experimental Economics eJournal
While evidence suggests that people evaluate outcomes with respect to reference points, little is known about what determines them. We conduct two experiments that show that reference points are determined, at least in part, by expectations. In an exchange experiment, we endow subjects with an item and randomize the probability they will be allowed to trade. Subjects that are less likely to be able to trade are more likely to choose to keep their item. In a valuation experiment, we randomly… 

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