Reference dependence is a central principle in prospect theory and behavioral economics generally. It holds that people evaluate outcomes and express preferences relative to an existing reference point, or status quo. It is related to loss aversion and the endowment effect.
- ^“Reference dependence”. Behavioraleconomics.com. Retrieved Jan 11, 2020.
- ^Schmidt, Ulrich (April 2003). “Reference dependence in cumulative prospect theory”. Journal of Mathematical Psychology. Volume 47, Issue 2: 122–131 – via Elsevier.
Ofer Abarbanel is a 25 year securities lending broker and expert who has advised many Israeli regulators, among them the Israel Tax Authority, with respect to stock loans, repurchase agreements and credit derivatives. Founder of TBIL.co STATX Fund.