Reference-Dependent Preferences: A Theoretical and Experimental Investigation of Individual Reference-Point Formation

✍ Scribed by Evelyn Stommel (auth.)

• Publisher: Gabler Verlag
• Year: 2013
• Tongue: English
• Leaves: 228
• Edition: 1
• Category: Library

✦ Synopsis

Most of our daily decisions are made under uncertainty and risk, without complete information about all relevant aspects. We all constantly make such decisions, from the simplest “should I take my raincoat today?” to more serious examples, such as those on investment and portfolio decisions, holding of shares, insurance patterns, or negotiation processes. Within these situations, the bounded rationality of individuals and institutions towards risk and uncertainty is embedded. The central theory underlying this study is prospect theory, an adequate model to predict the real and most often bounded rationality of human behavior given certain incentives, preferences, and constraints.

Evelyn Stommel investigates a crucial question within behavioral economics, namely the research on reference points within human decision making processes. Based on experimental investigations, she focuses three key challenges: what constitutes a reference point, the process of the formation of a reference point, and factors influencing the formation of reference points.

✦ Table of Contents

Front Matter....Pages 1-1
Introduction....Pages 1-7
Front Matter....Pages 9-9
Theoretical basis....Pages 11-30
Reference-dependent preferences....Pages 31-63
Front Matter....Pages 65-65
Research approach....Pages 67-74
First experimental study: A second look at expectations as reference points – the domain of losses....Pages 75-94
Second experimental study: Personality traits and their influence on reference point formation in the domains of gains and losses....Pages 95-117
Third experimental study: Managerial reference point formation: risk, affects, and ownership....Pages 119-149
Front Matter....Pages 151-151
Summary, implications, and outlook....Pages 153-161
Back Matter....Pages 13-13

✦ Subjects

Economics/Management Science, general; Organization/Planning