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Reference dependence
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<h2 id="example">Example</h2> <p>An example of reference dependence is if you were to take your friend to a movie theatre. It has been a long time since you have been to this particular theatre. Last time you attended you were impressed by the high quality of seats and decadent concession stand. Your friend who has a near identical preference of movie theatre to you but has never been to this particular theatre. Upon arrival you are shocked to find that there is no longer the same concession stand and the products unique to the theatre have now changed to a cheaper and efficient system of self-service products. The seats have become more worn and due to the age do not appear as luxurious. You are disappointed by this trade off of price over luxury but your friend is very satisfied by the efficiency and price point. An individual's utility function is impacted by their reference point. Reference dependence asserts a value onto a product that can be assigned with numerous differing attributes the value is measured by the deviation from a reference point or status quo, which is either a gain or a loss in value. </p> <h2 id="marathon-runners">Marathon Runners</h2> <p>In a large field study of marathon runners in 20 of the largest participated United States <a href="/facts/Marathon/IP3eBrhS">marathons</a> Markle et al. tested setting <a href="/facts/Status_quo/kMsM2X2s">non-status quo</a> reference points to determine the effect of reference dependence on runners satisfaction.<a class="footnote-ref" id="fnref:9" href="#fn:9"><sup>9</sup></a> The study by Markle et al. demonstrated that the changing of goals as reference points shape the value they weighted on their marathon. The study used satisfaction as an alternative measure for the <a href="/facts/Dependent_and_independent_variables/dINfzIF2">dependent variable</a>. They examined the satisfaction pre and post marathon runners. They were able to find that with the more experienced marathon runners that time goals as a reference point was not the only comparison and that the most recent or best marathon was a reference point to measure the satisfaction. Previous performance in marathons was a contributing factor in satisfaction aiding in the evidence of the hypothesises presented by Larsen <a class="footnote-ref" id="fnref:10" href="#fn:10"><sup>10</sup></a> et al. on mixed emotions. </p> <h2 id="references">References</h2> <ol> <li id="fn:1"><p>"Reference dependence". Behavioraleconomics.com. Retrieved Jan 11, 2020. <a href="https://www.behavioraleconomics.com/resources/mini-encyclopedia-of-be/reference-dependence/" target="_blank">https://www.behavioraleconomics.com/resources/mini-encyclopedia-of-be/reference-dependence/</a> <a href="#fnref:1" class="footnote-back-ref">↩</a></p></li> <li id="fn:2"><p>Schmidt, Ulrich (April 2003). "Reference dependence in cumulative prospect theory". Journal of Mathematical Psychology. 47 (2): 122–131. doi:10.1016/S0022-2496(02)00015-9. <a href="/wiki/Doi_(identifier)" target="_blank">/wiki/Doi_(identifier)</a> <a href="#fnref:2" class="footnote-back-ref">↩</a></p></li> <li id="fn:3"><p>Barberis, Nicholas; Xiong, Wei (October 2008). "Realization Utility". Cambridge, MA. doi:10.3386/w14440. S2CID 2981465. {{cite journal}}: Cite journal requires |journal= (help) <a href="https://doi.org/10.3386%2Fw14440" target="_blank">https://doi.org/10.3386%2Fw14440</a> <a href="#fnref:3" class="footnote-back-ref">↩</a></p></li> <li id="fn:4"><p>Genesove, David; Mayer, Christopher (March 2001). "Loss Aversion and Seller Behavior: Evidence from the Housing Market". Cambridge, MA. doi:10.3386/w8143. {{cite journal}}: Cite journal requires |journal= (help) <a href="https://doi.org/10.3386%2Fw8143" target="_blank">https://doi.org/10.3386%2Fw8143</a> <a href="#fnref:4" class="footnote-back-ref">↩</a></p></li> <li id="fn:5"><p>Markle, Alex; Wu, George; White, Rebecca; Sackett, Aaron (February 2018). "Goals as reference points in marathon running: A novel test of reference dependence". Journal of Risk and Uncertainty. 56 (1): 19–50. doi:10.1007/s11166-018-9271-9. ISSN 0895-5646. S2CID 189952215. <a href="https://dx.doi.org/10.1007/s11166-018-9271-9" target="_blank">https://dx.doi.org/10.1007/s11166-018-9271-9</a> <a href="#fnref:5" class="footnote-back-ref">↩</a></p></li> <li id="fn:6"><p>Ariely, Dan; Loewenstein, George (2006). "Sexual Decision-Making Scales". PsycTESTS Dataset. doi:10.1037/t47211-000. Retrieved 2020-11-01. <a href="https://dx.doi.org/10.1037/t47211-000" target="_blank">https://dx.doi.org/10.1037/t47211-000</a> <a href="#fnref:6" class="footnote-back-ref">↩</a></p></li> <li id="fn:7"><p>Kahneman, Daniel (1992-01-31). "Norms and the Perception of Events". Fort Belvoir, VA. doi:10.21236/ada250281. {{cite journal}}: Cite journal requires |journal= (help) <a href="https://dx.doi.org/10.21236/ada250281" target="_blank">https://dx.doi.org/10.21236/ada250281</a> <a href="#fnref:7" class="footnote-back-ref">↩</a></p></li> <li id="fn:8"><p>Larsen, Jeff T.; McGraw, A. Peter (2011). "Further evidence for mixed emotions". Journal of Personality and Social Psychology. 100 (6): 1095–1110. doi:10.1037/a0021846. ISSN 1939-1315. PMID 21219075. <a href="https://dx.doi.org/10.1037/a0021846" target="_blank">https://dx.doi.org/10.1037/a0021846</a> <a href="#fnref:8" class="footnote-back-ref">↩</a></p></li> <li id="fn:9"><p>Markle, Alex; Wu, George; White, Rebecca; Sackett, Aaron (February 2018). "Goals as reference points in marathon running: A novel test of reference dependence". Journal of Risk and Uncertainty. 56 (1): 19–50. doi:10.1007/s11166-018-9271-9. ISSN 0895-5646. S2CID 189952215. <a href="https://dx.doi.org/10.1007/s11166-018-9271-9" target="_blank">https://dx.doi.org/10.1007/s11166-018-9271-9</a> <a href="#fnref:9" class="footnote-back-ref">↩</a></p></li> <li id="fn:10"><p>Larsen, Jeff T.; McGraw, A. Peter (2011). "Further evidence for mixed emotions". Journal of Personality and Social Psychology. 100 (6): 1095–1110. doi:10.1037/a0021846. ISSN 1939-1315. PMID 21219075. <a href="https://dx.doi.org/10.1037/a0021846" target="_blank">https://dx.doi.org/10.1037/a0021846</a> <a href="#fnref:10" class="footnote-back-ref">↩</a></p></li> </ol>