caa a22 4500 475814517 CHVBK 20180406123806.0 cr unu---uuuuu 170329e20000701xx s 000 0 eng 10.1007/s001820000038 doi (NATIONALLICENCE)springer-10.1007/s001820000038 Shalev Jonathan 107 Hamelachim St., Ramat Hasharon 47286, Israel (e-mail: SHALEV@WITTY.COM), IL aut Loss aversion equilibrium [Elektronische Daten] [Jonathan Shalev] Abstract.: The Nash equilibrium solution concept for games is based on the assumption of expected utility maximization. Reference dependent utility functions (in which utility is determined not only by an outcome, but also by the relationship of the outcome to a reference point) are a better predictor of behavior than expected utility. In particular, loss aversion is an important element of such utility functions.  We extend games to include loss aversion characteristics of the players. We define two types of loss-aversion equilibrium, a solution concept endogenizing reference points. The two types reflect different procedures of updating reference points during the game. Reference points emerge as expressions of anticipation which are fulfilled.  We show existence of myopic loss-aversion equilibrium for any extended game, and compare it to Nash equilibrium. Comparative statics show that an increase in loss aversion of one player can affect her and other players' payoffs in different directions. Springer-Verlag Berlin Heidelberg, 2000 JEL classification: C72 nationallicence Key words: loss aversion nationallicence reference dependence nationallicence equilibrium nationallicence https://doi.org/10.1007/s001820000038 text/html Onlinezugriff via DOI 1 research-article jats NATIONALLICENCE 856 40 https://doi.org/10.1007/s001820000038 text/html Onlinezugriff via DOI NATIONALLICENCE 100 1- Shalev Jonathan 107 Hamelachim St., Ramat Hasharon 47286, Israel (e-mail: SHALEV@WITTY.COM), IL aut Metadata rights reserved Springer special CC-BY-NC licence nationallicence BK010053 XK010053 XK010000 NATIONALLICENCE NATIONALLICENCE NL-springer