Expectations as Endowments: Evidence on Reference-Dependent Preferences from Exchange and Valuation Experiments

By K. Ericson, Andreas Fuster. 2011

342 citations recorded by the source corpus.

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 determined, at least in part, by expectations. In an exchange experiment, we endow subjects with an item and randomize the probability they will be allowed to trade. Subjects that are less likely to be able to trade are more likely to choose to keep their item. In a valuation experiment, we randomly assign subjects a high or low probability of obtaining an item and elicit their willingness-to-accept for it. The high probability treatment increases valuation of the item by 20--30%. Copyright 2011, Oxford University Press.

Subfields: Economics and Econometrics, General Decision Sciences, Safety Research

View Paper: https://www.semanticscholar.org/paper/851efb55eb248c7f54cc9c6763d33e1f8a004827

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Citations in the corpus

Expectations-Based Reference-Dependent Life-Cycle Consumption (2017, methodology): “More recently, Ericson and Fuster (2010) demonstrate that subjects’ expectation to keep rather than possess a good accounts for the gap between WTA and WTP.”
The Computation of Stimulus Values in Simple Choice (2014, background): “First, suppose that there is relative SV coding (in the sense that the SV of every item is encoded as the difference between its value and that of a reference point, say SVoption SVreference), as it seems to be the case from the behavioral (Ericson and Fuster, 2011; Kahneman and Tversky, 1979) and n”