Deciding When to Quit: Reference-Dependence Over Slot Machine Outcomes
5 Pages Posted: 27 Jul 2015
Date Written: January 11, 2015
We conduct tests for reference dependent loss aversion using slot machine gamblers' decisions on when to quit playing for a visit to a casino. Evidence for a lagged status-quo reference point is found in the aggregate, while endogenously determined reference points are found when conditioning on betting intensity choices. Significant deviations from the distributions implied by random quitting support the loss aversion and diminishing sensitivity hypotheses.
Keywords: Consumer Economics, Decision-Making under Risk and Uncertainty, Gambling
JEL Classification: D12, D81, L83
Suggested Citation: Suggested Citation