Contract breach with overconfident expectations: Experimental evidence on reference-dependent preferences
通过实验室实验，研究了代理人生产中的过度自信预期如何影响合同违约行为，发现过度自信的代理人违约更频繁，且损失厌恶会加剧这一效应。
This study examines the effect of agents' overconfident expectations in their production on their contract breach. Drawing on a reference-dependent framework, we theoretically deduce propositions for compliance to agreements where an agent exhibits overconfidence and loss aversion. We further conduct a lab experiment with a multiple-stage design and find that overconfident agents are more likely to breach the contract than non-overconfident agents. Moreover, overconfident agents breach more often and to a greater extent with increasing loss aversion. We also test the impact of a non-deterministic environment (“shock condition”) where payoff misestimation can be masked compared to a deterministic environment (“no-shock condition”). Agents breach more often in the shock condition, but breach extent remains unaffected. Results are mostly in line with the theoretical framework. In a treatment, we manipulate agents' overconfidence exogenously and use it as an instrument to establish causality.