Framing, Expectations and Reference Points

Oliver März

Working Papers ECARES from ULB -- Universite Libre de Bruxelles

Abstract: Recent theories of expectation-based reference-dependent preferences offer a structured approach of the formation of reference points, yet do not incorporate important context-specific characteristics. One implicit assumption is that individuals form their reference point as expectations by correctly predicting the probabilistic environment they are facing. In an experimental setup, we demonstrate that a simple change in the framing of a decision problem alters the reference point formation by evoking a different moment of first focus. Apart from providing evidence on the limitations of current theories of expectation-based reference dependence, this paper further offers a theoretical extension that overcomes these limitations and allows reference points to be contingent on contextual effects.

Keywords: framing; expectations; stochastic reference points; salience effects (search for similar items in EconPapers)
JEL-codes: C91 D81 D84 (search for similar items in EconPapers)
Pages: 29 p.
Date: 2016-11
New Economics Papers: this item is included in nep-exp and nep-upt
References: View references in EconPapers View complete reference list from CitEc
Citations:

Published by:

Downloads: (external link)
https://dipot.ulb.ac.be/dspace/bitstream/2013/240785/3/2016-40-MARZ-framing.pdf Full text for the whole work, or for a work part (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eca:wpaper:2013/240785

Ordering information: This working paper can be ordered from
http://hdl.handle.ne ... lb.ac.be:2013/240785

Access Statistics for this paper

More papers in Working Papers ECARES from ULB -- Universite Libre de Bruxelles Contact information at EDIRC.
Bibliographic data for series maintained by Benoit Pauwels ().