A Structural Analysis of Disappointment Aversion in a Real Effort Competition

By David Gill, Victoria Prowse. Social Science Research Network, 2012

721 citations recorded by the source corpus.

We develop a novel computerized real effort task, based on moving sliders across a screen, to test experimentally whether agents are disappointment averse when they compete in a real effort sequential-move tournament. Our theory predicts that a disappointment averse agent, who is loss averse around her endogenous expectations-based reference point, responds negatively to her rival's effort. We find significant evidence for this discouragement effect, and use the Method of Simulated Moments to estimate the strength of disappointment aversion on average and the heterogeneity in disappointment aversion across the population.

Subfields: Demography, General Decision Sciences, Safety Research

View Paper: https://www.semanticscholar.org/paper/1e84c6ad15fa226ddb65698dcea82556cd568a1d

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Citations in the corpus

Uncertain Demand, Consumer Loss Aversion, and Flat-Rate Tariffs (2013, positive): “9Evidence for the assumption that expectations determine the reference point is documented by Abeler et al. (forthcoming), Post et al. (2008), Crawford and Meng (2009), Gill and Prowse (2009), and Ericson and Fuster (2009).”
Emotional Judges and Unlucky Juveniles (2018, neutral): “Despite their intuitive appeal, models of expectation-based reference point formation is diffi cult to test, and empirical evidence is predominantly limited to laboratory experiments (Abeler et al. 2011; Gill and Prowse 2012; Banerji and Gupta 2014).”
Ever Failed, Try Again, Succeed Better: Results from a Randomized Educational Intervention on Grit* (2019, positive): “With its dynamic real-e ort framework, the paper also contributes to the recent experimental economics literature on the motivational e ects of performance feedback and quitting behavior in work settings (Azmat and Iriberri, 2010; Eriksson, Poulsen and Villeval, 2009; Gill and Prowse, 2012; Barankay”
A survey of experimental research on contests, all-pay auctions and tournaments (2014, methodology): “A striking 9 Using a real-effort experiment, Gill and Prowse (2012) study a sequential-move tournament in which the second mover observes the first mover’s performance before choosing how much effort to expend.”
Expectations-Based Reference-Dependent Life-Cycle Consumption (2017, background): “…Koszegi and Rabin (2006, 2007) preferences is Sprenger (2010) on the implications of stochastic reference points, Abeler et al. (2012) on labor supply, Gill and Prowse (2012) on real-effort tournaments, Meng (2010) on the disposition effect, and Ericson and Fuster (2010) on the endowment effect.”
An Endowment Effect for Risk: Experimental Tests of Stochastic Reference Points (2015, neutral): “In two purposefully simple risk preference experiments, eliminating often-discussed confounds, I demonstrate both between and within subjects such an endowment effect for risk.”
Lab Labor: What can Labor Economists Learn from the Lab? (2010, positive): “Recent studies have found intriguing effects in opposite directions, with Gill and Prowse (2009) finding that being behind reduces effort (when standard preferences predict no effect) and Berger and Pope (2009) finding the opposite.”
Gender Differences and Dynamics in Competition: The Role of Luck (2012, positive): “12As noted in footnote 2, in Gill and Prowse (2010) we analyzed within-round responses to a rival’s choice of effort.”
Cultivating an understanding of curiosity as a seed for creativity (2020, methodology): “Recently, we have developed another behavioral measure adapted from economics research [51,52]—an effort task in which participants can ‘work’ for information.”
Overbidding and Heterogeneous Behavior in Contest Experiments (2013, positive): “When a 16 For theoretical considerations of loss aversion in rank-order tournaments see Gill and Stone (2010) and for experimental investigation see Gill and Prowse (2012) and Eisenkopf and Teyssier (2013).”
Expectations as Endowments: Evidence on Reference-Dependent Preferences from Exchange and Valuation Experiments (2011, positive): “(7)See also a related study by Gill and Prowse (2010) who find evidence for disappointment aversion in a two-person sequential-move tournament.”