We investigate experimentally whether preferences over an outcome depend on
what other possible outcomes of the situation under consideration are, i.e
., whether choices are "menu dependent." In simple sequential games we anal
yze whether reactions to a certain benchmark outcome are influenced by chan
ges in the payoffs of another outcome, not attainable at that time, called
the "reference point." Our data provide evidence that is favorable to the n
otion of menu dependence. Alterations of the reference point can lead to qu
antitatively significant changes in behavior at the benchmark outcome. The
behavior we observe can be interpreted in terms of negative reciprocity. (C
) 2001 Academic Press.