[DSRP Evidence](https://dsrpevidence.org/)

# Reference-Dependent Preferences and Sentiment-Driven Asset Prices

Benhabib et al., 2026, The Journal of Finance — Economics

Patterns: [Relationships](https://dsrpevidence.org/pattern/relationships), [Perspectives](https://dsrpevidence.org/pattern/perspectives)

## In short

Asset values are shown to depend on investors' reference point (a perspective that reframes identical fundamentals), which then feeds back causally into prices, coupling a perspective-dependent valuation to a relational feedback loop.

## What they found (results)

A general-equilibrium asset-pricing model shows expectations-based reference-dependent preferences generate self-fulfilling risk panics via a feedback loop between current prices and perceived future downside risk, explaining excess volatility, asymmetric volatility, and asymmetric sentiment over the business cycle.

These researchers were not testing DSRP. The finding is theirs; the correspondence to DSRP is drawn by this site.

[Source](https://doi.org/10.1111/jofi.70079)