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Title:A structural analysis of disappointment aversion in a real effort competition PDF Logo
Authors:Gill, David
Prowse, Victoria
Issue Date:2009
Series/Report no.:IZA Discussion Papers 4536
Abstract:We develop a novel computerized real effort task, based on moving sliders across a screen, to test experimentally whether agents are disappointment averse when they compete in a real effort sequential-move tournament. Our theory predicts that a disappointment averse agent, who is loss averse around her endogenous expectations-based reference point, responds negatively to her rival's effort. We find significant evidence for this discouragement effect, and use the Method of Simulated Moments to estimate the strength of disappointment aversion on average and the heterogeneity in disappointment aversion across the population.
Subjects:Disappointment aversion
loss aversion
reference-dependent preferences
reference point adjustment
expectations
tournament
real effort experiment
slider task
JEL:C91
D03
Document Type:Working Paper
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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