EconPapers    
Economics at your fingertips  
 

On complementary symmetry and reference dependence

Michał Lewandowski and Łukasz Woźny

No 2020-059, Working Papers from Warsaw School of Economics, Collegium of Economic Analysis

Abstract: This paper reevaluates the complementary symmetry hypothesis and the supporting experimental evidence. Originally the hypothesis was stated for binary risky prospects. We generalize the hypothesis to arbitrary state-contingent real-valued acts, thus extending the domain from risk to uncertainty/ambiguity and allowing for multiple outcomes. Existing experiments tested the hypothesis using selling and buying prices and found systematic violations. We argue that in order to be consistent with the hypothesis one should replace selling with short-selling. We thus define a new elicitation task and run an experiment to test our conjecture. We replicate previously observed violations in the old setting and find strong support for the hypothesis in the new setting. In addition, our results shed new light on the validity of various reference point setting rules.

Keywords: complementary symmetry; short selling price; buying price; reference dependence. (search for similar items in EconPapers)
Pages: 15 pages
Date: 2020-12
New Economics Papers: this item is included in nep-exp
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://kolegia.sgh.waw.pl/pl/KAE/Documents/WorkingPapersKAE/WPKAE_2020_059.pdf (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:sgh:kaewps:2020059

Access Statistics for this paper

More papers in Working Papers from Warsaw School of Economics, Collegium of Economic Analysis Contact information at EDIRC.
Bibliographic data for series maintained by Jakub Muck ().

 
Page updated 2021-02-22
Handle: RePEc:sgh:kaewps:2020059