Reference-Dependent Preferences, Probability Judgments and REI

This book provides empirical evidence that probability judgments help explain a reference-dependent preference. It explains using the data for Tokyo Taxi drivers which include the respondents about psychological questions. Probability judgments based on a dual process to cognition means judgements and calculations the probability when they determine something under uncertainty. It weakens the assumption that people have the same rationality based on the same process. We permit the difference of cognition to rationality and probability judgments. These probability judgments relate to reference points and drivers’ personalities and intuition, which influence decision making and can explain several reference dependences. The difference of cognition to rationality, of consciousness which try to act rationality, determine their reference dependence type. It uses Rational Experienced Inventory as the indexes of cognition to rationality. Frequentist type has different target variables with case type, subjective type, and fortune type. Each probability judgment type has each target as reference points. Probability judgment types explain the type of cognition to rationality. This explains the endogeneity of reference dependence. This paper permits some type of cognition to rationality.