Reference Wealth Effects in Sequential Choice.

B-Tier
Journal: Journal of Risk and Uncertainty
Year: 1998
Volume: 17
Issue: 1
Pages: 27-47

Score contribution per author:

2.011 = (α=2.01 / 1 authors) × 1.0x B-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

It is argued that in order to accommodate experimentally-observed choice patterns, it is not enough to model the utility function as being dependent on changes from a reference wealth point. Instead, individuals should be modeled as treating decisions as part of an identifiable sequence of decisions, and utility should be a function of reference wealth, income so far from the sequence, and payoffs from the current decision. The three-argument utility function allows for risk aversion over gains and risk seeking over losses for the first choice in the sequence, and for the house money and break-even effects in later decisions. Copyright 1998 by Kluwer Academic Publishers

Technical Details

RePEc Handle
repec:kap:jrisku:v:17:y:1998:i:1:p:27-47
Journal Field
Theory
Author Count
1
Added to Database
2026-01-26