Reference Points and Effort Provision

@article{Abeler2009ReferencePA,
  title={Reference Points and Effort Provision},
  author={Johannes Abeler and Armin Falk and Lorenz Goette and David Huffman},
  journal={Behavioral \& Experimental Economics},
  year={2009}
}
A key open question for theories of reference-dependent preferences is what determines the reference point. One candidate is expectations: what people expect could affect how they feel about what actually occurs. In a real-effort experiment, we manipulate the rational expectations of subjects and check whether this manipulation influences their effort provision. We find that effort provision is significantly different between treatments in the way predicted by models of expectation-based… 
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763 Citations
Highly Influential Citations
106
Background Citations
290
Methods Citations
113
Results Citations
57

763 Citations

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Citation Type

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The Limits of Expectations-Based Reference Dependence
TLDR
This work conducts a real-effort experiment manipulating expectations and examining consequences on effort provision, documenting substantial nonmonotonicities in the effort response to changing expectations.
Expectations as Endowments: Evidence on Reference-Dependent Preferences from Exchange and Valuation Experiments
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…
How expectations affect reference point formation: an experimental investigation
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It is shown that when expectations are present, they have a significant impact on reference point formation and it is found that decision-makers employ expected values when forming reference points as opposed to single possible outcomes (segregated mechanism).
Expectations as Endowments: Evidence on Reference-Dependent Preferences from Exchange and Valuation Experiments
Evidence on loss aversion and the endowment effect suggests that people evaluate outcomes with respect to a reference point. Yet little is known about what determines reference points. We conduct two…
Reference Point Formation
It is well-established that reference points are a feature of decision making under risk. In this paper we report an experiment, in which we investigate which of three potential reference points: (1)…
Lagged beliefs and reference-dependent utility
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There is a recent debate on whether prospect theory can explain the disposition effect. Using both theory and simulation, this paper shows that prospect theory often predicts the disposition effect…
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The Kőszegi-Rabin model of reference-dependent preferences proposes that the reference point to which consumption outcomes are compared is endogenously determined as a function of lagged,…
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