Deciding When to Quit: Reference-Dependence over Slot Machine Outcomes

Jaimie W. Lien and Jie Zheng

American Economic Review, 2015, vol. 105, issue 5, 366-70

Abstract: We conduct tests for reference dependent loss aversion using slot machine gamblers' decisions on when to quit playing for a visit to a casino. Evidence for a lagged status-quo reference point is found in the aggregate, while endogenously determined reference points are found when conditioning on betting intensity choices. Significant deviations from the distributions implied by random quitting support the loss aversion and diminishing sensitivity hypotheses.

JEL-codes: D12 D81 L83 (search for similar items in EconPapers)
Date: 2015
Note: DOI: 10.1257/aer.p20151036
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Citations: View citations in EconPapers (19)

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