An Approach to Testing Reference Points /
Rees-Jones, Alex.
An Approach to Testing Reference Points / Alex Rees-Jones, Ao Wang. - Cambridge, Mass. National Bureau of Economic Research 2022. - 1 online resource: illustrations (black and white); - NBER working paper series no. w30773 . - Working Paper Series (National Bureau of Economic Research) no. w30773. .
December 2022.
We present a general approach to experimentally testing candidate reference points. This approach builds from Prospect Theory's prediction that an increase in payoffs is perfectly offset by an equivalent increase in the reference point. Violation of this prediction can be tested with modifications to existing econometric techniques in experiments of a particular design. The resulting approach to testing theories of the reference point is minimally parametric, robust to broad classes of heterogeneity, yet still implementable in comparatively small sample sizes. We demonstrate the application of this approach in an experiment that tests the role of salience in setting reference points.
System requirements: Adobe [Acrobat] Reader required for PDF files.
Mode of access: World Wide Web.
Semiparametric and Nonparametric Methods: General
Micro-Based Behavioral Economics
An Approach to Testing Reference Points / Alex Rees-Jones, Ao Wang. - Cambridge, Mass. National Bureau of Economic Research 2022. - 1 online resource: illustrations (black and white); - NBER working paper series no. w30773 . - Working Paper Series (National Bureau of Economic Research) no. w30773. .
December 2022.
We present a general approach to experimentally testing candidate reference points. This approach builds from Prospect Theory's prediction that an increase in payoffs is perfectly offset by an equivalent increase in the reference point. Violation of this prediction can be tested with modifications to existing econometric techniques in experiments of a particular design. The resulting approach to testing theories of the reference point is minimally parametric, robust to broad classes of heterogeneity, yet still implementable in comparatively small sample sizes. We demonstrate the application of this approach in an experiment that tests the role of salience in setting reference points.
System requirements: Adobe [Acrobat] Reader required for PDF files.
Mode of access: World Wide Web.
Semiparametric and Nonparametric Methods: General
Micro-Based Behavioral Economics