Journal
AMERICAN ECONOMIC REVIEW
Volume 102, Issue 1, Pages 469-503Publisher
AMER ECONOMIC ASSOC
DOI: 10.1257/aer.102.1.469
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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. We predict that a disappointment averse agent, who is loss averse around her endogenous choice-acclimating 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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