In this paper, we develop a consumption-based asset pricing model motivated by prospect theory, where habit formation determines the endogenous reference point. This exploits the similarity between habit formation and prospect theory. Both emphasize that the investor does not care about the absolute amount of gain or loss, but rather compares the gain or the loss experienced to a benchmark. The...

Katrina Panovich MIT CSAIL Cambridge, MA 02139 [email protected] Abstract Many people set goals, like running daily or writing some amount each day. In this paper, we present a novel tool for supporting daily goals: Habitbot. Habitbot is a Twitter-based tool designed to support habit formation and maintenance. Habitbot uses Twitter as a social support system, as well as a tool for peer pressure. It ta...

We develop a model where dividend payout, investment and financing decisions are made by managers who attempt to maximize the rents they take from the firm. But the threat of intervention by outside shareholders constrains rents and forces rents and dividends to move in lockstep. Managers are risk-averse, and their utility function allows for habit formation. We show that dividends follow Lintn...

This paper develops a dynamic model to illustrate how diet and body weight change when novel food products become available to consumers. We propose a microfounded test to empirically discriminate between habit and taste formation in intertemporal preferences. Moreover, we show that 'novelty consumption' and endogenous preferences can explain the persistent correlation between economic developm...

BACKGROUND The twelve-item Self-Report Habit Index (SRHI) is the most popular measure of energy-balance related habits. This measure characterises habit by automatic activation, behavioural frequency, and relevance to self-identity. Previous empirical research suggests that the SRHI may be abbreviated with no losses in reliability or predictive utility. Drawing on recent theorising suggesting t...

Abstract This paper examines the implications of habit formation in private and public goods consumption for Pareto-efficient provision goods, based on a two-period model with nonlinear taxation. Under weak leisure separability, if good is flow-variable such that government directly decides level each period, leads to modification policy rule if, only degrees habituation differ consumption. By ...