Happiness and Loss Aversion : Is utility concave or convex in relative income ?

@inproceedings{Vendrika2007HappinessAL,
  title={Happiness and Loss Aversion : Is utility concave or convex in relative income ?},
  author={Maarten C. M. Vendrika and Geert B. Woltjerb},
  year={2007}
}
  • Maarten C. M. Vendrika, Geert B. Woltjerb
  • Published 2007
A central finding in happiness research is that a person’s life satisfaction depends on the level of her income relative to the average income in her social reference group. This dependence of life satisfaction on relative income can be related to the reference dependence of the value function in Kahneman and Tversky’s (1979) prospect theory. In this paper we investigate whether the characteristics of the value function like concavity for gains, convexity for losses, and loss aversion apply to… CONTINUE READING
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