Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/25689
Authors: 
Matthey, Astrid
Year of Publication: 
2008
Series/Report no.: 
Jena economic research papers 2008,003
Abstract: 
The paper introduces the concept of adjustment utility, that is, referencedependent utility from expectations. It offers an explanation for observed preferences that cannot be explained with existing models, and yields new predictions for individual decision making. The model gives a simple explanation for, e.g., why people are reluctant to change their plans even when these turn out to be unexpectedly costly; people’s aversion towards positive but false information, which cannot be explained with previous models; and the increasing acceptance of risks when people get used to them.
Subjects: 
utility
expectations
reference-dependent preferences
anticipation
prospect theory
experiments
JEL: 
D11
D81
D84
C99
Document Type: 
Working Paper

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