Attitudes towards success and failure

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• dc.contributor.author Alaoui, Larbi
• dc.contributor.author Penta, Antonio
• dc.contributor.other Universitat Pompeu Fabra. Departament d'Economia i Empresa
• dc.date.accessioned 2024-11-14T10:09:52Z
• dc.date.available 2024-11-14T10:09:52Z
• dc.date.issued 2022-03-21
• dc.date.modified 2024-11-14T10:08:33Z
• dc.description.abstract Individuals often attach a special meaning to obtaining a certain goal, and getting past a threshold marks the difference between what they consider a success or a failure. In this paper we take a standard von Neumann-Morgenstern Expected Utility setting with an exogenous reference point that separates success from failure, and define attitudes towards success and failure as features of preferences over lotteries. The distinctive feature of our definitions is that they all concern a local reversal of the decision maker's risk attitude between riskaversion and risk-lovingness across the reference point. Our findings provide a unified view of several well-known models of reference-dependent preferences in economics, finance and psychology, and also include novel representations. Moreover, we introduce orderings over the primitive space of preferences to define different attitudes with which each attitudes can be displayed, and characterize them in terms of the representation, with indices analogous to the well-known Arrow-Pratt index of risk aversion. Our findings shed new light on frequently used notions of reference-dependent preferences, and suggest that new comparative statics analyses be conducted in these settings. Finally, we argue that our framework may prove useful to incorporate, within a standard economic model, behavioral manifestations of personality traits that have received increasing attention within the empirical economics literature.
• dc.format.mimetype application/pdf*
• dc.identifier https://econ-papers.upf.edu/ca/paper.php?id=1831
• dc.identifier.citation
• dc.identifier.uri http://hdl.handle.net/10230/68627
• dc.language.iso eng
• dc.relation.ispartofseries Economics and Business Working Papers Series; 1831
• dc.rights L'accés als continguts d'aquest document queda condicionat a l'acceptació de les condicions d'ús establertes per la següent llicència Creative Commons
• dc.rights.accessRights info:eu-repo/semantics/openAccess
• dc.rights.uri http://creativecommons.org/licenses/by-nc-nd/3.0/es/
• dc.subject.keyword expected utility; loss aversion; aspirations; risk aversion; reference-dependence
• dc.subject.keyword Microeconomics
• dc.title Attitudes towards success and failure
• dc.title.alternative
• dc.type info:eu-repo/semantics/workingPaper