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dc.contributor.authorKovach, Matthewen
dc.date.accessioned2020-11-25T13:46:34Zen
dc.date.available2020-11-25T13:46:34Zen
dc.date.issued2020-07en
dc.identifier.issn1933-6837en
dc.identifier.urihttp://hdl.handle.net/10919/100943en
dc.description.abstractConsiderable evidence shows that people have optimistic beliefs about future outcomes. I present an axiomatic model of wishful thinking (WT), in which an endowed alternative, or status quo, influences the agent's beliefs over states and thus induces such optimism. I introduce a behavioral axiom formalizing WT and derive a representation in which the agent overweights states in which the endowment provides a higher payoff. WT is a novel channel through which an endowment may influence choice behavior and provides a coherent explanation for a variety of observed behavior, including choice reversals among nonstatus quo alternatives when the status quo changes. WT leads to inefficient risk sharing in an exchange economy and has unique implications for the gap between willingness to accept and willingness to pay for endowed goods.en
dc.format.mimetypeapplication/pdfen
dc.language.isoenen
dc.rightsCreative Commons Attribution NonCommercial 4.0 Internationalen
dc.rights.urihttp://creativecommons.org/licenses/by-nc/4.0/en
dc.subjectWishful thinkingen
dc.subjectstatus quo biasen
dc.subjectreference dependenceen
dc.subjectbelief distortionsen
dc.subjectoptimismen
dc.subjectD01en
dc.subjectD11en
dc.subjectD80en
dc.subjectD81en
dc.subjectD83en
dc.titleTwisting the truth: Foundations of wishful thinkingen
dc.typeArticle - Refereeden
dc.contributor.departmentEconomicsen
dc.title.serialTheoretical Economicsen
dc.identifier.doihttps://doi.org/10.3982/TE2744en
dc.identifier.volume15en
dc.identifier.issue3en
dc.type.dcmitypeTexten
dc.identifier.eissn1555-7561en


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Creative Commons Attribution NonCommercial 4.0 International
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