Economics Seminar（2016-06）

Topic:Nonparametric Analysis of Reference-Dependent Preference

Speaker:Vincent P. Crawford, Oxford University and the university of California

Time:Tuesday, May.3, 2:00-3:30pm

Place: Room 217, Guanghua Building 2

Abstract:

We derive nonparametric necessary and sufficient conditions, in the revealed-preference tradition of Samuelson (1948), Houthakker (1950), and Afriat (1967), for the existence of reference-dependent preferences that rationalize choice, as inK?szegi and Rabin’s (2006) and other structural implementations of Kahneman and Tversky’s (1979,1991) Prospect Theory. Referencedependence’s nonparametric implications depend on whether Prospect Theory’s notion of “sensitivity” is constant and whether reference points are observable. We revisit the dataset studied by Father (2005,2008) and V.P. Crawford and Meng (2011) using our nonparametric conditions characterizations of the theory. We find that reference-dependence still allows graceful rationalization of most cabdrivers’ labor supply.

Introduction:

Vincent Crawford is a professor at Oxford University and the university of California, San Diego, academician of the science and arts in the United States, causal academy of sciences, and member of the European academy of sciences. He has made the outstanding pioneering contribution in the Economic theory, Game Theory and Behavioral economics.

http://econweb.ucsd.edu/~v2crawford/