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- Jena Economic Resea...
- Volume 2
- Yesterday’s expecta...
Yesterday’s expectation of tomorrow determines what you do today: The role of reference-dependent utility from expectations
- Autor(in)
- Erschienen
- 15. Januar 2008
- Nummer des Discussion-Papers
-
2008-003
- Schlagwort(e)
-
anticipation
expectations
experiments
prospect theory
reference-dependent preferences
utility
- Zusammenfsg.
-
The paper introduces the concept of adjustment utility, that is, reference-dependent utility from expectations. It offers an explanation for observed preferences that cannot be explained with existing models, and yields new predictions for individual decision making. The model gives a simple explanation for, e.g., why people are reluctant to change their plans even when these turn out to be unexpectedly costly; people’s aversion towards positive but false information, which cannot be explained with previous models; and the increasing acceptance of risks when people get used to them.
- article pub. typess JER
- Research article
- article languages JER
- Englisch
- article research fields JER
- economics
- JEL-Classification for JER
- D11 - Consumer Economics: Theory ; D81 - Criteria for Decision-Making under Risk and Uncertainty ; D84 - Expectations; Speculations ; C90 - General