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Ulric B. and Evelyn L. Bray Social Sciences Seminar

Friday, March 8, 2019
12:00pm to 1:00pm
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Baxter B125
Heterogeneity of Gain-Loss Attitudes and Expectations-Based Reference Points
Charlie Sprenger, Associate Professor, Department of Economics, Rady School of Management, UC San Diego,

Abstract: This project examines the role of heterogeneity in gain-loss attitudes for identifying models of expectations-based reference dependence (Kőszegi and Rabin, 2006, 2007) (KR). Different gain-loss attitudes lead to different signs for KR comparative statics. Failure to account for known heterogeneity in gain-loss attitudes could be a central confounding factor challenging prior tests of the KR model conducted under the assumption of universal loss aversion. In an initial experiment with 607 subjects and an exact replication with a further 417, we show heterogeneous treatment effects over gain-loss types. Recognizing heterogeneity in gain-loss attitudes allows us to reliably recover the KR model's central predictions, and can account for inconsistency across prior empirical tests.

For more information, please contact Letty Diaz by phone at 626-395-1255 or by email at letty.diaz@caltech.edu.