A Test of the Theory of Reference-Dependent Preferences

Bateman, Ian J.; Munro, Alistair; Rhodes, Bruce; Starmer, Chris; Sugden, Robert

doi:10.1162/003355397555262

Cited by 297 publications

(153 citation statements)

References 1 publication

Supporting

Mentioning

147

Contrasting

Unclassified

Order By: Relevance

“…Viewed this way, choosing an alternative y ∈ S\{x} means that the subject individual gives up her status quo x and switches to y. 3 On the other hand, many real-life choice situations do not have a natural status quo alternative. Within the formalism of this paper, the choice problems of the form (S, ♦) model such situations.…”

Section: The Basic Frameworkmentioning

confidence: 99%

See 1 more Smart Citation

A Canonical Model of Choice with Initial Endowments

Masatlıoĝlu

2013

The Review of Economic Studies

View full text Add to dashboard Cite

We use the revealed preference method to derive a model of individual decision making when one's endowment provides a reference point that may influence her choices. This model generalizes the classical rational choice model. While the latter views choice as a consequence of "utility maximization," the model proposed here views choice as arising from "mentally constrained utility maximization," where the constraints are induced by one's initial endowment. In particular, this model allows for status quo bias. A range of economic applications are presented to identify the predictive and explanatory strength of the model. . JEL Classification: D11, D81.

show abstract

Section: The Basic Frameworkmentioning

confidence: 99%

“…3 In the language of Rubinstein and Salant (2008), any (S, x) in C sq (X) is a choice problem with a frame, where initial endowment x provides the "frame" for the problem. We assume throughout this paper that this frame is observable.…”

Section: Weak Axiom Of Status Quo Bias (Wsqb)mentioning

confidence: 99%

A Canonical Model of Choice with Initial Endowments

Masatlıoĝlu

2013

The Review of Economic Studies

View full text Add to dashboard Cite

show abstract

“…Some environmental studies have explored for the presence of what are termed sign, size and level effects (Bateman et al, 1997;Bateman et al, 2000;Arsenio et al, 2002;Horowitz and McConnell, 2002). The sign effect denotes an asymmetry between the valuations of gains or improvements in the level of an attribute and losses or deteriorations in the level of an attribute.…”

Section: Model Specificationmentioning

confidence: 99%

Traffic related noise and air quality valuations: evidence from stated preference residential choice models

Wardman

Bristow

2004

Transportation Research Part D: Transport and Environment

View full text Add to dashboard Cite

This paper reports on research which has estimated valuations of changes in traffic related noise levels and air quality and which contributes to the body of knowledge and to methodology in this area. There are several novel aspects of this research. Firstly, there have been relatively few stated preference studies of the monetary valuations of traffic related noise and air quality. A feature of this analysis is the examination of variations in values according to the size and sign of the environmental change, the currently experienced level of the attribute and various socio-economic factors. Secondly, the important issue of presentation is addressed, with two different methods used in the valuation of air quality and links made between valuations and physical measures. Thirdly, the results from stated preference and the contingent valuation method are compared. Finally, we bring together evidence from other studies and compare them with the findings obtained here.

show abstract

“…Foundations for such a multi-attribute utility function were developed by [5] which is supported by several empirical studies concerning decision making under risk (e.g. [2,4,32,25,9]). We require a reference point for each attribute about which we assess loss or gain.…”

Section: Discussionmentioning

confidence: 99%

“…The RA manager chooses a more expensive programme, performing tasks (2,3,4,9), that results in a higher expected reliability of 0.777, compared with the LA manager who performs tasks (3,4,9) which results in an expected reliability of 0.696, marginally below the 0.7 target. The additional activity chosen by the RA manager results in a 10% increase in project duration and a 50% increase in costs.…”

Section: Illustrative Impact Of Loss Versus Risk Aversionmentioning

confidence: 99%

Allocation of tasks for reliability growth using multi-attribute utility

Wilson

Quigley

2016

European Journal of Operational Research

View full text Add to dashboard Cite

In reliability growth models in particular, and project risk management more generally, improving the reliability of a system or product is limited by constraints on cost and time. There are many possible tasks which can be carried out to identify and design out weaknesses in the system under development. This paper considers the allocation problem: which subset of tasks to undertake. While the method is applicable to project risk management generally, the work has been motivated by reliability growth programmes. We utilise a model for reliability growth, based on an efficacy matrix, developed with engineering experts in the aerospace industry. We develop a general multi-attribute utility function based on targets for cost, time on test and system reliability. The optimal subset is identified by maximising the prior expected utility. We derive conditions on the model parameters for risk aversion and loss aversion based on observed properties of preference. We give conditions for multivariate risk aversion under the general form of the utility function. The method is illustrated using an example informed by work with aerospace organisations.

show abstract

A Test of the Theory of Reference-Dependent Preferences

Cited by 297 publications

References 1 publication

A Canonical Model of Choice with Initial Endowments

A Canonical Model of Choice with Initial Endowments

Traffic related noise and air quality valuations: evidence from stated preference residential choice models

Allocation of tasks for reliability growth using multi-attribute utility

Contact Info

Product

Resources

About