Reference-dependent preferences can explain several puzzling observations about organizational change. We introduce a dynamic model in which a loss-neutral firm bargains with loss-averse workers over organizational change and wages. We show that change is often stagnant or slow for long periods...

It is well known that innovation law and policy must strike a balance between incentivizing inventions on the one hand, and granting monopolies to successful innovators on the other. In achieving this balance, it is commonly presumed that actors in innovation markets respond to their economic...

En este artículo se examina la condición normativa de la teoría de la decisión racional (TDR) en cuanto guía, marco analítico —para la evaluación normativa— y teoría —para la explicación/predicción— de la acción; además, se explica cuál es su justificación conceptual y...

This study measures risk and loss aversion using Prospect Theory and examines the impact of emotions on these parameters. Students’ emotions were manipulated using information on rising deaths due to drug violence in Mexico and youth unemployment and Tanaka et al. (2010) methodology was...

This paper suggests a behavioral, preference-based definition of loss aversion for decision under risk. This definition is based on the initial intuition of Markowitz [30] and Kahneman and Tversky [19] that most individuals dislike symmetric bets, and that the aversion to such bets increases...

This paper presents a regression procedure for inhomogeneous data characterized by varying variance, skewness and kurtosis or by an unequal amount of data over the estimation domain. The concept is based first on the estimation of the densities of an observed variable for given values of...

Cumulative Prospect Theory (Kahneman, Tversky, 1979, 1992) holds that the value function is described using a power function, and is concave for gains and convex for losses. These postulates are questioned on the basis of recently reported experiments, paradoxes (gain-loss separability...

We study the effects of the tax burden on tax evasion both theoretically and experimentally. We develop a model of tax evasion decision that is based on two ideas from behavioral economics: 1) taxpayers are endowed with reference dependent preferences that are subject to hedonic adaptation; and...

This paper presents a review of adaptation concepts at the evolutionary, environmental, neural, sensory, mental and mathematical levels, including Helson’s and Parducci’s theories of perception and category judgments. Two kinds of adaptation can be clearly distinguished. The first, known as...

Prospect Theory (1979) and its Cumulative version (1992) argue for probability weighting to explain lottery choices. Decision Utility Theory presents an alternative solution, which makes no use of this concept. The new theory distinguishes decision and perception utility, postulates a double...