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The Revealed Preference Implications of Reference Dependent Preferences

Author

Listed:
  • Faruk Gul

    (Princeton University)

  • Wolfgang Pesendorfer

    (Princeton University)

Abstract

Köszegi and Rabin (2005) propose a theory of reference dependent utility in which the ultimate choice also serves as the reference point. They analyze dynamic choice problems with uncertainty and interpret their model as a description of the individuals psychological process. We focus on static and deterministic choice problems and identify the revealed preference implications of their model.

Suggested Citation

  • Faruk Gul & Wolfgang Pesendorfer, 2006. "The Revealed Preference Implications of Reference Dependent Preferences," Working Papers 2006-1, Princeton University. Economics Department..
    • Handle: RePEc:pri:econom:2006-1
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    File URL: http://www.princeton.edu/~pesendor/refdep.pdf
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    References listed on IDEAS

    as
    1. Kim, Taesung & Richter, Marcel K., 1986. "Nontransitive-nontotal consumer theory," Journal of Economic Theory, Elsevier, vol. 38(2), pages 324-363, April.
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    More about this item

    Keywords

    Reference-dependent preferences; choice under risk;

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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