Risk taking after absolute and relative wealth changes: The role of reference point adaptation

• Published in: Journal of risk and uncertainty Vol. 54; no. 2; pp. 157 - 186
• Main Authors: Chao, Hong, Ho, Chun-Yu, Qin, Xiangdong
• Format: Journal Article
• Language: English
• Published: New York Springer 01.04.2017; Springer US; Springer Nature B.V
• Subjects: Adaptation; Attitudes; Changes; Economic Theory/Quantitative Economics/Mathematical Methods; Economics; Economics and Finance; Environmental Economics; Microeconomics; Operations Research/Decision Theory; Risk; Risk behavior; Risk taking; Wealth; Social comparison; Wealth changes; Prior outcome; D03; Reference point adaptation; C91; D81; Risk attitude; C1

We conducted an experiment to compare subjects' attitudes toward risk before and after they experienced wealth changes induced by a real-effort task. We identified and estimated the subjects' levels of reference point adaptation to absolute and relative wealth changes. We found that after...