Abstract
We show that a number of previously isolated experimental results for behavior in stag-hunt coordination games can all be described by means of reference-dependent preferences. This includes an aversion to negative payoffs (loss avoidance) and a sensitivity to payoff differences. In addition, we also connect other-regarding preferences to this framework. Specifically, we show that an exogenous reference point can induce cooperative behavior, provided that the players are sufficiently risk-loving in the loss domain. Finally, we comment on the relevance of these findings to theories of equilibrium selection.
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