Reference-Dependence and Marginal Utility : Alt, Samuelson, and Bernardelli

This paper shows that the possibility of formally incorporating reference-dependence into the theory of consumer behavior was explored well before Kahneman and Tversky (1991); specifically, in separate papers by Alt, Samuelson or Bernardelli in late 1930s. These papers emerged within a debate on the relationship between marginal utility and ordinality/cardinality of utility. The present paper identifies Alt's, Samuelson's and Bernardelli's contributions and delineates the relationship between marginal utility and reference-dependence. It also discusses the reception of their ideas by other economists and suggests some reasons for their neglect