Testing the Reference-Dependent Model: A Laboratory Search Experiment

41 Pages Posted: 10 Jun 2019

See all articles by Takahiro Miura

Takahiro Miura

Kansai University

Kengo Inukai

Meiji Gakuin University

Masaru Sasaki

Osaka University - Institute of Social and Economic Research (ISER)

Date Written: May 2019

Abstract

Our paper conducts laboratory experiments with the sequential search model to test whether participants engage in search activities in line with theoretical predictions derived from the expected utility model or the reference-dependent model, without assuming any specific formulation rule for a reference point. Our experimental results showed that the participants' search behavior did not align with the reference-dependent model. In addition, the correlation between individual preferences and search behavior reinforced our experimental results; that is, loss aversions were not significantly correlated with search behavior.

Keywords: risk preference, loss aversion, sequential search

JEL Classification: D81, D83

Suggested Citation

Miura, Takahiro and Inukai, Kengo and Sasaki, Masaru, Testing the Reference-Dependent Model: A Laboratory Search Experiment (May 2019). IZA Discussion Paper No. 12378, Available at SSRN: https://ssrn.com/abstract=3401146 or http://dx.doi.org/10.2139/ssrn.3401146

Takahiro Miura (Contact Author)

Kansai University

3-3-35 Yamatecho
Osaka, 564-8680
Japan

Kengo Inukai

Meiji Gakuin University

Shirokane-dai 1-2-37, Minato-ku
Tokyo, 108-8636
United States

Masaru Sasaki

Osaka University - Institute of Social and Economic Research (ISER) ( email )

6-1 Mihogaoka
Ibaraki, Osaka 567-0047
Japan

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