A structural analysis of disappointment aversion in a real effort competition
A structural analysis of disappointment aversion in a real effort competition
We develop a novel computerized real effort task, based on moving sliders across a screen, to test experimentally whether agents are disappointment averse when they compete in a real effort sequential-move tournament. Our theory predicts that a disappointment averse agent, who is loss averse around her endogenous expectations-based reference point, responds negatively to her rival's effort. We find significant evidence for this discouragement effect, and use the Method of Simulated Moments to estimate the strength of disappointment aversion on average and the heterogeneity in disappointment aversion across the population.
IZA - Institute of Labor Economics
Gill, David
2319117f-b14e-48c6-8a33-34f5c9d4e2ea
Prowse, Victoria
ffdd8965-c965-4f96-a8fa-c8e506af564b
October 2009
Gill, David
2319117f-b14e-48c6-8a33-34f5c9d4e2ea
Prowse, Victoria
ffdd8965-c965-4f96-a8fa-c8e506af564b
Gill, David and Prowse, Victoria
(2009)
A structural analysis of disappointment aversion in a real effort competition
Bonn, DE.
IZA - Institute of Labor Economics
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Monograph
(Discussion Paper)
Abstract
We develop a novel computerized real effort task, based on moving sliders across a screen, to test experimentally whether agents are disappointment averse when they compete in a real effort sequential-move tournament. Our theory predicts that a disappointment averse agent, who is loss averse around her endogenous expectations-based reference point, responds negatively to her rival's effort. We find significant evidence for this discouragement effect, and use the Method of Simulated Moments to estimate the strength of disappointment aversion on average and the heterogeneity in disappointment aversion across the population.
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Published date: October 2009
Additional Information:
IZA Discussion Paper 4536
Identifiers
Local EPrints ID: 79221
URI: http://eprints.soton.ac.uk/id/eprint/79221
PURE UUID: 364ce742-7316-47a1-9c81-5c06384aa3bc
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Date deposited: 11 Mar 2010
Last modified: 07 Mar 2024 18:14
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Contributors
Author:
David Gill
Author:
Victoria Prowse
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