Loss Aversion and Labor Supply
Fachartikel 53
Fachbereich
Volkswirtschaftslehre
Fachrichtung
Empirische Wirtschaftsforschung
Artikel
2005
Sprache
englisch
Co Autoren
Lorenz Goette, David Huffman
Beschreibung
In many occupations workers’ labor supply choices are constrained by institutional rules regulating labor time and effort provision. This renders explicit tests of the neoclassical theory of labor supply difficult. Here we present evidence from studies examining labor supply responses in “neoclassical environments” in which workers are free to choose when and how much to work. Despite the favorable environment the results cast doubt on the neoclassical model. They are, however, consistent with a model of reference dependent preferences exhibiting loss aversion and diminishing sensitivity.
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