Endowment Effects in Chimpanzees
In: Current Biology, Volume 17, p. 1704-1707
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In: Current Biology, Volume 17, p. 1704-1707
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In: Tinbergen Institute Discussion Paper 15-114/I
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In: Journal of institutional and theoretical economics: JITE, Volume 177, Issue 4, p. 449
ISSN: 1614-0559
In: NBER working paper series 16715
"This paper is aimed to assess, with two lab experiments, to what extent Kőszegi and Rabin's (2006) model of expectations-based reference-dependent preferences can explain Knetsch's (1989) endowment effect. Departing from past work, we design an experiment that treats the two goods (a mug and a pen) symmetrically in all but in the probabilities with which they are expected to be owned. Thus, our "endowmentless" endowment effect experiment shuts down all alternative mechanisms while leaving expectations the only difference between treatments. We find no evidence that expectations alone can reproduce any of the original effect"--National Bureau of Economic Research web site
In: Scottish journal of political economy: the journal of the Scottish Economic Society, Volume 47, Issue 2, p. 183-197
ISSN: 1467-9485
The endowment effect, which is well documented in the contingent valuation literature, alters people's preferences according to a reference point established in an elicitation question. In particular, the utility that people place on a bundle is both a positive function of the quantities of the goods comprising the bundle, and a negative function of any loss (real or hypothetical) that the elicitation question asks them to incur. Biases such as this have lead some to reject the contingent valuation method as a means of quantifying costs and benefits in favour of other methods of preference elicitation such as standard gambles. But, most preference elicitation methods used by economists require people to express their preferences for one good in terms of their willingness to forego some of another good. Consequently, it is reasonable to expect that, and prudent to check whether, an endowment effect is also evident in other methods of preference elicitation such as von Neumann‐Morgenstern's standard gambles. Internal inconsistencies in the standard gamble method from the experimental economics literature and from a study into the value of non‐fatal road injuries are shown to be evidence that an endowment effect is also at work in standard gambles.
We study the endowment effect and expectation-based reference points in the field leveraging the setup of the Socio-Economic Panel. Households receive a small item for taking part in the panel, and we randomly assign respondents either a towel or a notebook, which they can exchange at the end of the interview. We observe a trading rate of 32 percent, consistent with an endowment effect, but no relationship with loss aversion. Manipulating expectations of the exchange opportunity, we find no support for expectation-based reference points. However, trading predicts residential mobility and is related to stock-market participation, i.e., economic decisions that entail parting with existing resources.
In: NBER Working Paper No. w16715
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In: Journal of risk and uncertainty, Volume 65, Issue 1, p. 83-104
ISSN: 1573-0476
In: Univ. of Copenhagen Dept. of Economics Discussion Paper No. 09-04
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In: University of Chicago, Becker Friedman Institute for Economics Working Paper No. 2022-70
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In: USC CLEO Research Paper No. C01-1; USC Law and Economics Research Paper No. 01-8; Yale Law & Economics Research Paper No. 261
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In: International Journal of Conflict Management, Volume 20, Issue 3, p. 212-227
PurposeThe purpose of this paper is to investigate whether changing the sequence of proposals during negotiations and changing the order of the responding options might minimize the endowment effect, therefore producing a better chance at reaching an agreement.Design/methodology/approachThe study includes four versions of questionnaires comprised of two identical proposals (one gain and one loss) in reversal sequences, and two identical reimbursement options in reverse order. The four versions aim to allow for a combined investigation of the impact of proposals sequence and the reimbursement options sequence on the endowment effect. Each of the study's 814 participants received one of the four questionnaires. Based on both framing and contrast effects, it is hypothesized that the sequence of proposals – when the first one is conceived as a loss and the second as a gain – has a moderating impact on the endowment effect.FindingsThe findings show a significant endowment effect as a high demand inducer in negotiations, and a significant impact of the proposals sequence as a factor that reduces the endowment effect. However, no significant impact of the responding options' order on the endowment effect was found.Practical implicationsThe study contributes to the understanding of the impact of proposal sequence in negotiations. Negotiators who understand how to utilize the proposals sequence may lead the negotiation to a concessionary atmosphere.Originality/valueThe paper focuses on the application of the framing and contrast effects to the negotiation process, as well as highlighting the negotiation process, whereby negotiators' insight about the proposal sequence may lead to a better outcome.
In: Tinbergen Institute Discussion Paper 2018-093/VIII
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