Experimental and empirical evidence shows that the utility an individual derives from a certain state depends on the reference state she compares it to. According to economic theory, the reference state is determined by past, present and future outcomes of either the individual herself or her...

Experimental and field evidence show that people perceive and evaluate new risks differently from risks that are common. In particular, people get used to the presence of certain risks and become less eager to avoid them. We explain this observation by including risks in the reference states of...

Three results emerge from a simple experiment on imitation. First, I find behavior which strongly suggests an intention to imitate. Second, players imitate successful other players rather than repeating successful actions. Third, to find imitation examples, players use several periods of memory....

Private banks often blame state guarantees to distort competition by giving public banks the advantage of lower funding costs. In this paper I show that if borrowers perceive the public bank as supporting economic development, private banks may be able to separate firms by self selection, enter...

SFB 649 Discussion Paper 2005-036 Getting Used to Risks: Reference Dependence and Risk Inclusion Astrid Matthey* * Department of Economics, Humboldt-Universität zu Berlin and Department of Economics, Technische Universität Berlin, Germany This research was...

Restricted access to finance is often stated as one of the main obstaclesto the development of the SME sector in Russia. In this paper, wepropose a new lending strategy that allows private banks to profitablyincrease financing of this sector in spite of being at a disadvantagecompared to the...