Environmental policy design and analysis in the context of reference-dependent preferences: A literature review

Katherine Hassett

No 267, OECD Environment Working Papers from OECD Publishing

Abstract: Reference-dependent preferences - individuals’ tendency to make decisions based on how potential outcomes compare to a reference point - can have important implications for environmental policy design and analysis. This paper reviews the empirical literature to understand how reference dependence affects how individuals engage with environmental incentives, adopt new technologies, participate in environmental markets and support environmental policies. Based on this evidence, it examines the implications of reference dependence for environmental policies and identifies areas for future research.

Keywords: behaviour; environmental policy; loss aversion; prospect theory; Reference-dependent preferences (search for similar items in EconPapers)
JEL-codes: D01 D10 D40 D62 D80 D90 H21 Q58 (search for similar items in EconPapers)
Date: 2025-12-22
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Persistent link: https://EconPapers.repec.org/RePEc:oec:envaaa:267-en

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