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Disappointment aversion and social comparisons in a real-effort competition

Gaechter, Simon; Huang, Lingbo; Sefton, Martin

Authors

SIMON GAECHTER simon.gaechter@nottingham.ac.uk
Professor, Psychology of Economic Decision Making

Lingbo Huang lingbo.huang@nottingham.ac.uk



Abstract

We present an experiment to investigate the source of disappointment aversion in a sequential real-effort competition. Specifically, we study the contribution of social comparison effects to the disappointment aversion previously identified in a two-person real-effort competition (Gill, D., and V. Prowse. “A Structural Analysis of Disappointment Aversion in a Real Effort Competition.” American Economic Review, 102, 2012, 469–503). To do this we compare “social” and “asocial” versions of the Gill and Prowse experiment, where the latter treatment removes the scope for social comparisons. If disappointment aversion simply reflects an asymmetric evaluation of losses and gains we would expect it to survive in our asocial treatment. Alternatively, if losing to or winning against another person affects the evaluation of losses/gains, as we show would be theoretically the case under asymmetric inequality aversion, we would expect treatment differences. We find behavior in social and asocial treatments to be similar, suggesting that social comparisons have little impact in this setting. Unlike in Gill and Prowse we do not find evidence of disappointment aversion. (JEL C91, D12, D81, D84)

Journal Article Type Article
Publication Date Jul 1, 2018
Journal Economic Inquiry
Print ISSN 0095-2583
Electronic ISSN 1465-7295
Publisher Wiley
Peer Reviewed Peer Reviewed
Volume 56
Issue 3
APA6 Citation Gaechter, S., Huang, L., & Sefton, M. (2018). Disappointment aversion and social comparisons in a real-effort competition. Economic Inquiry, 56(3), https://doi.org/10.1111/ecin.12498
DOI https://doi.org/10.1111/ecin.12498
Keywords real effort competition, social comparison effects, disappointment aversion, reference-dependent preferences
Publisher URL http://onlinelibrary.wiley.com/doi/10.1111/ecin.12498/full
Copyright Statement Copyright information regarding this work can be found at the following address: http://creativecommons.org/licenses/by/4.0

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Copyright Statement
Copyright information regarding this work can be found at the following address: http://creativecommons.org/licenses/by/4.0





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