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De Gustibus and Disputes about Reference Dependence

Campos-Mercade, Pol LU ; Goette, Lorenz ; Graeber, Thomas ; Kellogg, Alex and Sprenger, Charles (2026) In Review of Economic Studies
Abstract
Existing tests of reference-dependent preferences assume universal loss aversion. This paper examines the implications of heterogeneity in gain-loss attitudes for such tests. In experiments on labor supply and exchange behavior, we first measure gain-loss attitudes and then study a canonical treatment effect that distinguishes different models of reference dependence. We document substantial heterogeneity in gain-loss attitudes and evidence against universal loss aversion. Moreover, we find heterogeneous treatment effects over gain-loss attitudes consistent with formulations of expectations-based reference points. Assuming homogeneous preferences would lead to different and potentially incorrect conclusions in these tests. Our findings... (More)
Existing tests of reference-dependent preferences assume universal loss aversion. This paper examines the implications of heterogeneity in gain-loss attitudes for such tests. In experiments on labor supply and exchange behavior, we first measure gain-loss attitudes and then study a canonical treatment effect that distinguishes different models of reference dependence. We document substantial heterogeneity in gain-loss attitudes and evidence against universal loss aversion. Moreover, we find heterogeneous treatment effects over gain-loss attitudes consistent with formulations of expectations-based reference points. Assuming homogeneous preferences would lead to different and potentially incorrect conclusions in these tests. Our findings provide foundational support for reference points derived from expectations and help reconcile inconsistencies in prior empirical exercises. (Less)
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Contribution to journal
publication status
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Review of Economic Studies
publisher
Oxford University Press
ISSN
0034-6527
language
English
LU publication?
yes
id
214a7633-3151-40ad-a827-718588401e10
date added to LUP
2026-04-20 16:25:43
date last changed
2026-04-21 13:32:33
@article{214a7633-3151-40ad-a827-718588401e10,
  abstract     = {{Existing tests of reference-dependent preferences assume universal loss aversion. This paper examines the implications of heterogeneity in gain-loss attitudes for such tests. In experiments on labor supply and exchange behavior, we first measure gain-loss attitudes and then study a canonical treatment effect that distinguishes different models of reference dependence. We document substantial heterogeneity in gain-loss attitudes and evidence against universal loss aversion. Moreover, we find heterogeneous treatment effects over gain-loss attitudes consistent with formulations of expectations-based reference points. Assuming homogeneous preferences would lead to different and potentially incorrect conclusions in these tests. Our findings provide foundational support for reference points derived from expectations and help reconcile inconsistencies in prior empirical exercises.}},
  author       = {{Campos-Mercade, Pol and Goette, Lorenz and Graeber, Thomas and Kellogg, Alex and Sprenger, Charles}},
  issn         = {{0034-6527}},
  language     = {{eng}},
  month        = {{03}},
  publisher    = {{Oxford University Press}},
  series       = {{Review of Economic Studies}},
  title        = {{De Gustibus and Disputes about Reference Dependence}},
  year         = {{2026}},
}