Giorgi, Enrico G. De; Post, Thierry - In: Management Science 57 (2011) 6, pp. 1094-1110
This study investigates reference-dependent choice with a stochastic, state-dependent reference point. The optimal … reference-dependent solution equals the optimal consumption solution (no loss aversion) if the reference point is selected fully … endogenously. Given that loss aversion is widespread, we conclude that the reference point generally includes an important …