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Expectations-based reference-dependence and labor supply: Eliciting cabdrivers’ expectations in the field

Author

Listed:
  • Crawford, Vincent P.
  • Jin, Miao
  • Meng, Juanjuan
  • Yao, Lan

Abstract

This paper reports a field experiment on Shanghai cabdrivers’ labor supply, analyzing the data using an expectations-based reference-dependent model that allows daily income- and hours-targeting. Our main innovation is to elicit the cabdrivers’ income and hours expectations, twice a day. We find that expectations indeed affect labor supply in a way predicted by a reference-dependent model, and hours expectations have a stronger influence than income expectations. Both expectations are found to be correlated with their most recent historical average values. While income expectations do adjust within the day, hours expectations are sticky. The findings suggest that the targeting effect based on hours expectations plays a more important role than traditionally thought.

Suggested Citation

  • Crawford, Vincent P. & Jin, Miao & Meng, Juanjuan & Yao, Lan, 2025. "Expectations-based reference-dependence and labor supply: Eliciting cabdrivers’ expectations in the field," Journal of Economic Behavior & Organization, Elsevier, vol. 239(C).
    • Handle: RePEc:eee:jeborg:v:239:y:2025:i:c:s0167268125003786
    DOI: 10.1016/j.jebo.2025.107259
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    Keywords

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    JEL classification:

    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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