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Dan Anderberg and Claudia Cerrone
''Investment in education under disappointment aversion''
( 2017, Vol. 37 No.3 )
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 investments in education for lower ability people and increases investments for higher ability people, thereby magnifying the gap between them generated by the riskiness of education.
Keywords: education; risk; disappointment aversion; endogeneous reference points.
JEL: I2 - Education: General
D1 - Household Behavior: General
Manuscript Received : Dec 17 2016 Manuscript Accepted : Jul 02 2017

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