[ { "id": "authors:40h5v-w7372", "collection": "authors", "collection_id": "40h5v-w7372", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20200727-101446329", "type": "publication_workingpaper", "title": "Heterogeneity of Gain-Loss Attitudes and Expectations-Based Reference Points", "author": [ { "family_name": "Goette", "given_name": "Lorenz", "clpid": "Goette-L" }, { "family_name": "Graeber", "given_name": "Thomas", "clpid": "Graeber-T-G" }, { "family_name": "Kellogg", "given_name": "Alexandre", "clpid": "Kellogg-A" }, { "family_name": "Sprenger", "given_name": "Charles", "clpid": "Sprenger-C-D" } ], "abstract": "This project examines the role of heterogeneity in gain-loss attitudes for identifying models of expectations-based reference dependence (Koszegi and Rabin, 2006, 2007) (KR). Different gain-loss attitudes lead to different signs for KR comparative statics. Failure to account for the known heterogeneity in gain-loss attitudes is a central confounding factor challenging prior tests of the KR model conducted under the assumption of universal loss aversion. We document heterogeneous treatment effects over gain-loss types in both an initial experiment and an exact replication. Recognizing heterogeneity over types allows us to both recover the KR model's central predictions, and account for inconsistency across prior empirical tests.", "doi": "10.2139/ssrn.3589906", "publisher": "SSRN Electronic Journal", "publication_date": "2020-05-20" }, { "id": "authors:1c9m0-j7r21", "collection": "authors", "collection_id": "1c9m0-j7r21", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20200721-142739420", "type": "publication_workingpaper", "title": "On the Empirical Validity of Cumulative Prospect Theory: Experimental Evidence of Rank-Independent Probability Weighting", "author": [ { "family_name": "Bernheim", "given_name": "B. Douglas", "clpid": "Bernheim-B-D" }, { "family_name": "Sprenger", "given_name": "Charles", "clpid": "Sprenger-C-D" } ], "abstract": "Cumulative Prospect Theory (CPT), the leading behavioral account of decision making under uncertainty, avoids the dominance violations implicit in Prospect Theory (PT) by assuming that the probability weight applied to a given outcome depends on its ranking. We devise a simple and direct non-parametric method for measuring the change in relative probability weights resulting from a change in payoff ranks. We find no evidence that these weights are even modestly sensitive to ranks. Conventional calibrations of CPT preferences imply that the percentage change in probability weights should be an order of magnitude larger than we observe. It follows either that probability weighting is not rank-dependent, or that the weighting function is nearly linear. Non-parametric measurement of the change in relative probability weights resulting from changes in probabilities rules out the second possibility. Additional tests nevertheless indicate that the dominance patterns predicted by PT do not arise. We reconcile these findings by positing a form of complexity aversion that generalizes the well-known certainty effect.", "doi": "10.2139/ssrn.3350196", "publisher": "SSRN Electronic Journal", "publication_date": "2020-01-17" }, { "id": "authors:rnerp-5rh75", "collection": "authors", "collection_id": "rnerp-5rh75", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20200722-084620971", "type": "publication_workingpaper", "title": "Heterogeneity of Loss Aversion and Expectations-Based Reference Points", "author": [ { "family_name": "Goette", "given_name": "Lorenz", "clpid": "Goette-L" }, { "family_name": "Graeber", "given_name": "Thomas", "clpid": "Graeber-T-G" }, { "family_name": "Kellogg", "given_name": "Alexandre", "clpid": "Kellogg-A" }, { "family_name": "Sprenger", "given_name": "Charles", "clpid": "Sprenger-C-D" } ], "abstract": "This project examines the role of heterogeneity in loss aversion for identifying models of expectations-based reference dependence (K\u0151szegi and Rabin, 2006, 2007) (KR). Different levels of loss aversion lead to different signs for comparative statics previously used to test the KR model. In an experiment with 607 subjects, we show heterogeneous treatment effects over loss aversion types. Recognizing heterogeneity in loss aversion allows us to reliably recover the KR model's central element of expectations-based reference points. Additional effects are discussed related to the subjective perception of exchange experiences.", "doi": "10.2139/ssrn.3170670", "publisher": "SSRN Electronic Journal", "publication_date": "2018-04-27" }, { "id": "authors:mynjm-2c298", "collection": "authors", "collection_id": "mynjm-2c298", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20200722-144742783", "type": "publication_workingpaper", "title": "A Stream of Prospects or a Prospect of Streams: On the Evaluation of Intertemporal Risks", "author": [ { "family_name": "Andreoni", "given_name": "James", "clpid": "Andreoni-J" }, { "family_name": "Feldman", "given_name": "Paul", "clpid": "Feldman-P" }, { "family_name": "Sprenger", "given_name": "Charles", "clpid": "Sprenger-C-D" } ], "abstract": "Recent debate has identified important gaps in the understanding of intertemporal risks. Critical to closing these gaps is evidence on which dimension of intertemporal risk \u2013 the risk or the time \u2013 is evaluated first. Though under discounted expected utility this ordering is of no consequence, under discounted non-expected utility models the order of evaluation is critical. We provide experimental tests in which different orderings of evaluation generate different predictions for behavior. We find more support for the notion that the risk dimension is evaluated first.", "doi": "10.3386/w24075", "publisher": "National Bureau of Economic Research", "publication_date": "2017-11" }, { "id": "authors:mmzrj-vt103", "collection": "authors", "collection_id": "mmzrj-vt103", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20200721-151516242", "type": "publication_workingpaper", "title": "Field experiments on the development of time preferences", "author": [ { "family_name": "Andreoni", "given_name": "James", "clpid": "Andreoni-J" }, { "family_name": "Kuhn", "given_name": "Michael", "clpid": "Kuhn-M-A" }, { "family_name": "List", "given_name": "John A.", "clpid": "List-J-A" }, { "family_name": "Samek", "given_name": "Anya", "clpid": "Samek-A" }, { "family_name": "Sprenger", "given_name": "Charles", "clpid": "Sprenger-C-D" } ], "abstract": "Time preferences have been correlated with a range of life outcomes, yet little is known about their early development. We conduct a field experiment to elicit time preferences of nearly 1,000 children ages 3-12, who make several inter temporal decisions. To shed light on how such primitives form, we explore various channels that might affect time preferences, from background characteristics to the causal impact of an early schooling program that we developed and operated. Our results suggest that time preferences evolve substantially during this period with younger children displaying more impatience than older children. We also find a strong association with race: black children, relative to white or Hispanic children, are more impatient. Interestingly, parents of black children are also much more impatient than parents of white and Hispanic children. Finally, assignment to different schooling opportunities is not significantly associated with child time preferences.", "publisher": "Caltech Library", "publication_date": "2017-10" }, { "id": "authors:enknv-r5836", "collection": "authors", "collection_id": "enknv-r5836", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20200721-135422905", "type": "publication_workingpaper", "title": "Procrastination in the Field: Evidence from Tax Filing", "author": [ { "family_name": "Martinez", "given_name": "Seung-Keun", "clpid": "Martinez-Seung-Keun" }, { "family_name": "Meier", "given_name": "Stephan", "clpid": "Meier-S" }, { "family_name": "Sprenger", "given_name": "Charles", "clpid": "Sprenger-C-D" } ], "abstract": "This paper attempts to identify present-biased procrastination in tax filing behavior. Our exercise uses dynamic discrete choice techniques to develop a counterfactual benchmark for filing behavior under the assumption of exponential discounting. Deviations between this counterfactual benchmark and actual behavior provide potential 'missing-mass' evidence of present bias. In a sample of around 22,000 low-income tax filers we demonstrate substantial deviations between exponentially-predicted and realized behavior, particularly as the tax deadline approaches. Present-biased preferences not only provide qualitatively better in-sample fit than exponential discounting, but also have improved out-of-sample predictive power for responsiveness of filing times to the 2008 Economic Stimulus Act recovery payments. Additional experimental data from around 1100 individuals demonstrates a link between experimentally measured present bias and deviations from exponential discounting in tax filing behavior.", "publisher": "Caltech Library", "publication_date": "2017-01-16" }, { "id": "authors:w36r0-cg632", "collection": "authors", "collection_id": "w36r0-cg632", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20200727-095123331", "type": "publication_workingpaper", "title": "Using Preference Estimates to Customize Incentives: An Application to Polio Vaccination Drives in Pakistan", "author": [ { "family_name": "Andreoni", "given_name": "James", "clpid": "Andreoni-J" }, { "family_name": "Callen", "given_name": "Michael", "clpid": "Callen-M" }, { "family_name": "Khan", "given_name": "Yasir", "clpid": "Khan-Yasir" }, { "family_name": "Jaffar", "given_name": "Karrar", "clpid": "Jaffar-Karrar" }, { "family_name": "Sprenger", "given_name": "Charles", "clpid": "Sprenger-C-D" } ], "abstract": "We use structural estimates of time preferences to customize incentives for polio vaccinators in Lahore, Pakistan. We measure time preferences using intertemporal allocations of effort, and derive the mapping between these structural estimates and individually optimized incentives. We evaluate the effect of matching contract terms to discounting parameters in a subsequent experiment with the same vaccinators. This exercise provides a test of the specific point predictions given by structural estimates of discounting parameters. We demonstrate that tailoring contract terms to individual discounting moves allocation behavior significantly towards the intended objective.", "doi": "10.3386/w22019", "publication_date": "2016-02" }, { "id": "authors:qxc34-7rx30", "collection": "authors", "collection_id": "qxc34-7rx30", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20200722-150215296", "type": "publication_workingpaper", "title": "Randomizing Endowments: An Experimental Study of Rational Expectations and Reference-Dependent Preferences", "author": [ { "family_name": "Goette", "given_name": "Lorenz", "clpid": "Goette-L" }, { "family_name": "Harms", "given_name": "Annette", "clpid": "Cerulli-Harms-A" }, { "family_name": "Sprenger", "given_name": "Charles", "clpid": "Sprenger-C-D" } ], "abstract": "An important advance in the study of reference-dependent preferences is the discipline provided by coherent accounts of reference point formation. K\u0151szegi and Rabin (2006) provide such discipline by positing a reference point grounded in rational expectations. We examine the predictions of K\u0151szegi and Rabin (2006) in the context of market experiments with probabilistic forced exchange. The experiment tightly tests the predictions of K\u0151szegi and Rabin (2006), as when the probability of forced exchange increases, individuals should grow more willing to exchange. This mechanism has the theoretical potential to eliminate and even reverse the 'endowment effect' (Knetsch and Sinden, 1984; Knetsch, 1989; Kahneman et al., 1990). Our results uniformly reject these theoretical predictions. In a series of experiments with a total of 930 subjects, sellers' valuations exceed buyers' valuations under all probabilities of forced exchange. In robustness tests where attention is drawn specifically to the forced exchange mechanism, the results are directionally more promising for buyers, but still reject the main thrust of the theoretical predictions. Our findings suggest a potential path forward incorporating failures to completely forecast sensations of gain and loss into models of expectations-based reference dependence.", "publisher": "Caltech Library", "publication_date": "2014-11" }, { "id": "authors:q0esz-3e044", "collection": "authors", "collection_id": "q0esz-3e044", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20200722-143437938", "type": "publication_workingpaper", "title": "Credit Card Debt and Payment Use", "author": [ { "family_name": "Sprenger", "given_name": "Charles", "clpid": "Sprenger-C-D" }, { "family_name": "Stavins", "given_name": "Joanna", "clpid": "Stavins-J" } ], "abstract": "Approximately half of credit card holders in the United States regularly carry unpaid credit card debt. These so-called \"revolvers\" exhibit payment behavior that differs from that of those who repay their entire credit card balance every month. Previous literature has focused on the adoption of debit cards by people who carry credit card balances, but so far there has been no empirical analysis exploring the relationship between revolving behavior and patterns of payment use, such as substitution away from credit cards to other payment methods. \n\nUsing data collected in the 2005 Survey of Consumer Payment Preferences, we explore the relationship between revolving credit card balances and payment use. We find that credit card revolvers are significantly more likely to use debit and less likely to use credit than convenience users who repay their balances each month. There is no significant difference between these two types of credit card users in their use of check or cash. The two groups differ in their perceptions of payments as well as in their payment behavior: revolvers are significantly less likely to view debit as superior with respect to ease of use and acceptability, but more likely to see debit as superior with respect to control over money and budgeting.", "doi": "10.2139/ssrn.1139134", "publication_date": "2008-05" } ]