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| Author: | Dunn, L. |
| Title: | Loss aversion and adaptation in the labor market: empirical indifference functions and labor supply |
| Journal: | Review of Economics and Statistics
1996 : AUG, VOL. 78:3, p. 441-450 |
| Index terms: | LOSS LABOUR MARKETS LABOUR SUPPLY |
| Language: | eng |
| Abstract: | This paper presents empirically determined indifference functions for income and leisure which exhibit the phenomena of loss aversion and a utility reference point determined by adaptation , as expounded by Kahneman and Tversky and others. Data for this study were gathered in original surveys of seven diverse labor markets. The indiferrence functions of all show common features consistent with loss aversion/adaptation. These features help explain stability in labor markets in the face of an overtime premium which prevents the many workers from being at an optimal equilibrium. |
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