Reference-dependent Discounting  

15:30-17:00, Friday, March 22, 2024

I-206, Boxue Building, DUFE

Dr. Zhihua LI is now a Professor of Beijing Normal University-HongKong Baptist University International College. She earned her Ph.D. in Economics from Erasums University Rotterdam in 2014. She has worked in the Behavioural Science Group at Warwick Business School and the Department of Economics at the University of Birmingham. Her research interests is behavioral economics. She has her papers published in Economic Journal, Management Science, Journal of Risk and Uncertainty,etc.

Reference-dependence has become a widely established phenomenon in decision making under risk, not only for monetary outcomes but also for other outcomes, e.g. related to health. However, when the prospects involve risk about timing (the time of receipt of outcomes), rather than the outcomes themselves, much less is known about sign-dependence. This study extends discounted utility to incorporate reference-dependence and is the first to test for reference-dependence in timing prospects. Prospects were constructed for two contexts (health and money) and two kinds of outcomes (amount of the outcome and timing of the outcome). For all tasks, a majority of subjects is risk averse for gains and risk seeking for losses, with risk attitudes more mixed for losses. We also observe substantial pessimism with regard to probabilities, and loss aversion for both health and money, and both for risk regarding the outcomes and regarding timing. Therefore, we found substantial empirical support for reference-dependent discounting, both in the monetary and in the health domain. Our results show that psychological biases such as probability weighting and loss aversion are also important, some even more pronounced, when timing is risky.

For more information of the seminar, scan the following QR code(s) to join Tencent QQ group (904 544 292) or WeChat group named "IAER Seminar (5)", please.

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(QR code is valid until 19/3/2024)