Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/87132
Authors: 
Maggi, Mario Alessandro
Year of Publication: 
2004
Series/Report no.: 
Quaderni di Dipartimento, EPMQ, Università degli Studi di Pavia 165
Abstract: 
This paper deals with utility (or value) function for reference dependent models. A new characterization of S-shaped utility functions displaying loss aversion is put forward. Then it is used to analyze some standard forms commonly used in the literature. It is shown that, unless some parameters' restrictions are imposed, power and exponential S-shaped utilities can lead to prefer fair symmetric games to the status quo and do not display loss aversion. Finally two new examples of simple S-shaped utility functions exhibiting loss aversion are presented.
Subjects: 
reference dependence utility
loss aversion
JEL: 
D81
Document Type: 
Working Paper

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