Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/232648 
Year of Publication: 
2020
Series/Report no.: 
IZA Discussion Papers No. 13896
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
This paper explores whether loss aversion applies to social image concerns. In a simple model, we combine loss aversion in social image concerns and attitudes towards lying. We then test its predictions in a laboratory experiment. Subjects are first ranked publicly in a social image relevant domain, intelligence. This initial rank serves as within-subject reference point. After inducing an exogenous change in subjects' rank across treatments, subjects are offered scope for lying to improve their final rank. We find evidence for loss aversion in social image concerns. Subjects who face a loss in social image lie more than those experiencing gains if they sufficiently care about social image and have a reputation to lose. Individual-level analyses document a discontinuity in lying behavior when moving from rank losses to gains, indicating a kink in the value function for social image.
Subjects: 
loss aversion
social image concerns
lying behavior
laboratory experiment
JEL: 
C91
D91
Document Type: 
Working Paper

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