Reference Point Effects in Riskless Choice Without Loss Aversion

Numerous studies have demonstrated that preferences among options in riskless choice are often influenced by reference points. That is, an existing reference level or status quo can bias preferences toward new alternatives. Reference-dependent effects have typically been attributed to loss aversion (Tversky & Kahneman, 1991). The key idea is that when an option is being considered, an individual assesses the advantages and disadvantages of that option along each attribute with respect to the reference point. Disadvantages (losses) are weighted more than advantages (gains) in the decision process. This research provides new experimental evidence that 3 standard referencedependent effects arise in a low-level perceptual decision task with nonhedonic stimuli. This casts doubt on explanations such as loss aversion, which are limited to high-level decisions with hedonic stimuli, and indicates that reference-dependent effects may be amenable to a general explanation at the level of the basic decision process.