TY  - RPRT
        AU  - Rutledge, Robert
AU  - Alladi, Vinayak
AU  - Cheung, Stephen L.
        TI  - Price Expectations and Reference-Dependent Preferences
        PY  - 2022/Jun/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 15375
        UR  - https://www.iza.org/index.php/publications/dp15375
        AB  - We experimentally test Kőszegi and Rabin's (2006, 2007) theory of reference-dependent preferences in the context of price expectations. In an incentivised valuation task, participants are endowed with a mug and provide their willingness to accept (WTA) to sell it. We manipulate the sale price in a separate, exogenous forced sale scenario, which is predicted to produce a 'comparison effect', moving WTA in the opposite direction to the forced sale price. Consistent with the theory, we observe a treatment effect of between AUD $0.79 and $2.06 in the hypothesised direction; however, it is statistically insignificant. We also elicit participants' loss aversion to account for heterogeneity in the theorised effect; however, controlling for the interaction between our treatment and loss aversion does not consistently strengthen our result.
        KW  - comparison effect
KW  - price expectations
KW  - reference dependence
KW  - loss aversion
        ER  -