Abstract:This paper explores whether loss aversion applies to social image concerns. In a simple model, we combine loss aversion in social image concerns and attitudes towards lying. We then test its predictions in a laboratory experiment. Subjects are first ranked publicly in a social image relevant domain, intelligence. This initial rank serves as within-subject reference point. After inducing an exogenous change in subjects' rank across treatments, subjects are offered scope for lying to improve their final rank. We… Show more
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