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Revealed Preference Foundations of Expectations-Based Reference-Dependence

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Abstract

This paper provides revealed preference foundations for a model of expectations based reference-dependence a la Koszegi and Rabin (2006). Novel axioms provide distinguishing features of expectations-based reference-dependence under risk. The analysis completely characterizes the model’s testable implications when expectations are unobservable.

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  • David Freeman, 2013. "Revealed Preference Foundations of Expectations-Based Reference-Dependence," Discussion Papers dp13-10, Department of Economics, Simon Fraser University.
  • Handle: RePEc:sfu:sfudps:dp13-10
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    2. Daniele Pennesi, 2013. "Endogenous Status Quo," Carlo Alberto Notebooks 314, Collegio Carlo Alberto.
    3. Yusufcan Masatlioglu & Collin Raymond, 2016. "A Behavioral Analysis of Stochastic Reference Dependence," American Economic Review, American Economic Association, vol. 106(9), pages 2760-2782, September.
    4. Park Hyeon, 2016. "Loss Aversion and Consumption Plans with Stochastic Reference Points," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 16(1), pages 303-336, January.

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    More about this item

    Keywords

    Reference-dependent preferences; expectations as the reference point; preferred personal equilibrium; choice under risk;
    All these keywords.

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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