This paper studies the intertemporal allocation of incentives in a repeated moral hazard model with reference-dependent preferences as in Kőszegi and Rabin (2009). Besides consumption utility, the agent experiences utility from the change in his beliefs about present and future effort and income. When effort plans are rational, the prospect of being disappointed by the outcome realization equal...

Vol. XLII (May 2005), 119–128 119 *Nathan Novemsky is Assistant Professor of Marketing, School of Management, Yale University (e-mail: [email protected]). Daniel Kahneman is Eugene Higgins Professor of Psychology, Psychology Department, Woodrow Wilson School, Princeton University (e-mail: [email protected]). The authors thank On Amir, Dan Ariely, Ravi Dhar, Shane Frederick, Joel Hub...

Decision making behaviour has often been shown to vary following changes in the way in which choice problems are described (or 'framed'). Moreover, a number of researchers have demonstrated that the standard gamble is prone to internal inconsistency, and loss aversion has been proposed as an explanation for this observed bias. This study attempts to alter the influence of loss aversion by frami...

The authors investigate the psychophysiological correlates of loss aversion in hotel choice. Consumers are frequently found reluctant to shift their choice a subsequent option from first encountered hotel. concept can explain this ordering effect. However, there is knowledge gap about how exactly leads such inertia. present study provides more direct measurement decision process by examining el...

This paper is the first to apply prospect theory to societal health-related decision making. In particular, we allow for utility curvature, equity weighting, sign-dependence, and loss aversion in choices concerning quality of life of other people. We find substantial inequity aversion, both for gains and losses, which can be attributed to both diminishing marginal utility and differential weigh...

In riskless intertemporal choice, experimental studies suggest that a decision maker prefers smoothing a utility distribution implied by a sequence of outcomes. This paper extends, in an axiomatic framework, this notion of utility smoothing to a stochastic setting. We show that such an application can provide an axiomatic model of loss aversion in dynamic choice under uncertainty, which contras...