Caution and Reference EffectsPietro Ortoleva (Princeton University)

28 January 2021

We welcome Pietro Ortoleva (Princeton University) who will present his project

Caution and Reference Effects

Abstract: We establish a theoretical link between three phenomena at the core of behavioral economics: the Endowment Effect, Loss Aversion, and violations of Expected Utility as in the Certainty Effect. In our model, all jointly stem from one single force: uncertainty about the right utility function and caution. We show that our model is derived from positing a form of the certainty effect that implies both Loss Aversion and the Endowment Effect. We analyze further implications of our model and demonstrate how it can organize existing empirical evidence of the Endowment Effect, and how it is conceptually and behaviorally distinct from other popular approaches (e.g., Cumulative Prospect Theory).

Place: Zoom (please contact leonie.gerhards@uni-hamburg.de to get the login information)
Time: 17:15 - 18:45
We invite everyone interested to attend!