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Adaptation towards reference values: a non-linear perspective

Georgellis, Yannis; Gregoriou, Andros; Tsitsianis, Nikolaos

Authors

Yannis Georgellis

Andros Gregoriou

Nikolaos Tsitsianis



Abstract

Using large-scale panel data, we examine the dynamics of adjustment towards reference points for key workplace attributes. We discover that an Exponential Smooth Transition Autoregressive (ESTAR) model is superior to a linear model in characterizing such a process. The speed of adjustment increases non-linearly with the distance from reference points and adjustment is faster for job satisfaction shocks compared to shocks in earnings or work hours. Our findings lend further credence to the relative utility hypothesis and highlight the inherently non-linear nature of the dynamic path of adjustment towards reference points, a previously neglected issue in the adaptation literature.

Citation

Georgellis, Y., Gregoriou, A., & Tsitsianis, N. (2008). Adaptation towards reference values: a non-linear perspective. Journal of Economic Behavior and Organization, 67(3-4), (768-781). doi:10.1016/j.jebo.2007.08.007. ISSN 0167-2681

Journal Article Type Article
Acceptance Date Aug 29, 2007
Online Publication Date Sep 10, 2007
Publication Date 2008-09
Deposit Date Nov 13, 2014
Journal Journal Of Economic Behavior & Organization
Print ISSN 0167-2681
Publisher Elsevier
Peer Reviewed Peer Reviewed
Volume 67
Issue 3-4
Pages 768-781
DOI https://doi.org/10.1016/j.jebo.2007.08.007
Keywords Reference points; Relative utility; Adaptation; ESTAR models; Job satisfaction
Public URL https://hull-repository.worktribe.com/output/466303
Publisher URL https://www.sciencedirect.com/science/article/pii/S0167268107001710?via%3Dihub