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Reference Points And Contract Interpretation: An Empirical Examination, Doron Teichman

Doron Teichman

This Article focuses on the influence of framing on contract-interpretation decisions. A large body of both psychological and economic studies suggests that people treat payoffs framed as gains and payoffs framed as losses distinctly. Building on these studies, we hypothesize that contract interpretation decisions will be affected by the way in which they are framed. More specifically, we expect that promisors will tend to adopt a more self-serving interpretation when they are making decisions in the domain of losses. To test this prediction, we run a series of three experiments that are all based on a between-subject design. The first …