Reference Points and Effort Provision

Armin Falk, Lorenz Goette, David Huffman and Johannes Abeler

No 7221, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: A key open question for theories of reference-dependent references is what determines the reference point. One candidate is expectations: what people expect could affect how they feel about what actually occurs. In a real-effort experiment, we manipulate the rational expectations of subjects and check whether this manipulation influences their effort provision. We find that effort provision is significantly different between treatments in the way predicted by models of expectation-based reference-dependent preferences: if expectations are high, subjects work longer and earn more money than if expectations are low.

Keywords: Disappointment; Expectations; Experiment; Loss aversion; Reference points; Risk aversion (search for similar items in EconPapers)
JEL-codes: C91 D01 D84 J22 (search for similar items in EconPapers)
Date: 2009-03
New Economics Papers: this item is included in nep-exp
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

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Related works:
Journal Article: Reference Points and Effort Provision (2011)
Working Paper: Reference Points and Effort Provision (2011)
Working Paper: Reference Points and Effort Provision (2009)
Working Paper: Reference Points and Effort Provision (2009)
Working Paper: Reference Points and Effort Provision (2009)
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