CREED Seminars Amsterdam

Speaker(s)
Armin Falk (Bonn University, Institute for the Study of Labour)
Date
2008-11-06
Location
Amsterdam

  We test theories of reference-dependent preferences that assume the reference point to be a function of individual expectations. In a real-effort laboratory experiment, we manipulate the rational expectations of subjects and check whether this manipulation influences their labor supply. The experiment is designed such that risk aversion or status-quo reference dependence cannot cause a treatment difference. We find that labor supply is significantly different between treatments in exactly the way predicted by models of expectation-based reference-dependent preferences.