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  Investment in education under disappointment aversion

Anderberg, D., & Cerrone, C. (2017). Investment in education under disappointment aversion. Economics Bulletin, 37(3), 1533-1540.

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 Creators:
Anderberg, Dan, Author
Cerrone, Claudia1, Author              
Affiliations:
1Max Planck Institute for Research on Collective Goods, Max Planck Society, ou_2173688              

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Free keywords: education; risk; disappointment aversion; endogeneous reference points
 JEL: D03 - Behavioral Microeconomics: Underlying Principles
 JEL: D81 - Criteria for Decision-Making under Risk and Uncertainty
 JEL: I21 - Analysis of Education
 Abstract: This paper develops a model of risky investment in education under disappointment aversion, modelled as loss aversion around one's endogenous expectation. The model shows that disappointment aversion reduces the optimal investment in education for lower ability people and increases it for higher ability people, thereby magnifying the investment gap between them generated by the riskiness of education. Policies aimed at influencing students' expectations can reduce early dropout.

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 Dates: 2017
 Publication Status: Published in print
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 Rev. Type: Peer
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Title: Economics Bulletin
Source Genre: Journal
 Creator(s):
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Publ. Info: -
Pages: - Volume / Issue: 37 (3) Sequence Number: - Start / End Page: 1533 - 1540 Identifier: -