The paper introduces the concept of adjustment utility, that is, referencedependent utility from expectations. It offers an explanation for observed preferences that cannot be explained with existing models, and yields new predictions for individual decision making. The model gives a simple...

We analyze one of the explanations why people participate in lotteries. Our hypothesis stipulates that part of the value that a unit of money buys in lotteries is consumed before the actual resolution in the form of emotions such as hope. In other words, a person holding a lottery ticket may...

This paper investigates environmental policy in the presence of endogenous preferences. The optimal time trajectory is achieved if and only if the consumer is perfectly time-consistent. The suboptimal trajectories do not only differ from the optimal path during the transition between two...

We report the results of a combination of a dictator experiment with either a "social planner" or a "veil of ignorance" experiment. The experimental design and the analysis of the data are based on the theoretical framework proposed in the companion paper by Becker, Häger, and Heufer (BHH,...

We provide a framework to decompose preferences into a notion of distributive justice and a selfishness part and to recover individual notions of distributive justice from data collected in appropriately designed experiments. "Dictator games" with varying transfer rates used in Andreoni and...