Article

Are Adults Better Behaved than Children? Age, Experience, and the Endowment Effect

Authors:
To read the full-text of this research, you can request a copy directly from the authors.

Abstract

We find that large increases in age do not reduce the endowment effect, supporting the hypothesis that people have reference-dependent preferences which are not changed by repeated experience getting and giving up goods.

No full-text available

Request Full-text Paper PDF

To read the full-text of this research,
you can request a copy directly from the authors.

... Indeed, traditional economic theories predict that increased experience with markets should lead to a reduction in both irrational biases and irrational overall decision making, with more rational decision making observed in cases where subjects have extensive experience (e.g., through their jobs; List, 2003List, , 2004 or training (e.g., taking economics classes; Wang, Malhotra, & Murnighan, 2011). Interestingly, though, for the biases we will address in this paper, there is no evidence of a reduction across childhood (see also , Harbaugh, Krause, & Vesterlund, 2001). Even though children tend to have increased opportunities to earn and spend money through childhood (Otto, 2013), these decision-making experiences do not appear to lead to more rational decision making. ...
... Similarly, past work indicates that children have a tendency to keep an endowed object rather than trading for an equally attractive alternative (Da Silva, Moreira, & Da Costa Jr, 2014;Gelman, Manczak, & Noles, 2012;Harbaugh et al., 2001;Lucas, Wagner, & Chow, 2008). The youngest age at which this tendency has been observed using this trading methodology is 4 to 5 years. ...
... However, adaptations of this procedure reveal that children as young as 2 years show more subtle evidence of the endowment effect, with increased preferences for objects with which they have been endowed (Gelman et al., 2012). Indeed, the one study that has explicitly addressed the development of this bias found no significant differences between 3 rd graders, 5 th graders and adults (Harbaugh et al., 2001), indicating that the effect may emerge relatively early in development. However, it is important to note that work with 4year-olds has shown that only about 30% of children showed behavior consistent with an endowment effect (Lucas et al., 2008), so not all children are showing this effect so early. ...
Article
Full-text available
Humans make countless choices every day that affect their health, safety, and finances. Despite the high stakes, decision-making is often irrational from the viewpoint of traditional economics, i.e., the choices made are contrary to existing preferences. This leads to negative consequences for individuals and to inefficiencies in the exchange of goods. The fields of behavioral and experimental economics have made great strides in understanding these sub-optimal patterns of behavior, but we still cannot always predict human decisions. In this paper, we present developmental, cross-cultural, and comparative findings for three irrational tendencies (framing effects, the endowment effect, and inequity aversion) to illustrate two different patterns that experience can play in their formation. This analysis allows us to consider why these tendencies have emerged, what benefits they may bring to the decision-maker, and to propose types of interventions that may combat these tendencies. Throughout, we suggest where this approach of combining comparative and developmental work can address theoretical debates and practical questions within the field of behavioral economics.
... The first is an experiment aimed to test in which kind of situation children can be affected by the endowment effect by letting them ranking objects and designing picture of a farm in three different visons [6]. The second one is a experiment about making college students and children choose a few kinds of equally value objects and ask them if they want to change for another object by using object they have [7]. The third one is a real-life study of comparing children's reaction when they were given two options at the beginning and when they were first given an option but force them to change the option to another one. ...
... Although students in third and fifth grades have much more experience in buying, selecting, and abandoning goods compared with students in the kindergarten, they showed no less affected by the endowment effect. When it comes to the undergraduates, though they have exponential experiences than students in kindergarten, the result is still the same [7]. This experiment showed age is not a factor that can less the endowment effect. ...
Article
Full-text available
This paper will be examining the effect of endowment effect and loss aversion on individuals through the lenses of self, gender and age, i.e. children, respectively. When examining the endowment effect on self-enhancing by an example of shopping, loss aversion and the endowment effect is found to be more intense to an individual when one is more conscious of self-threat (i.e. when prices are higher). Through the lenses of gender, there is a lack of evidence of whether loss aversion is more effective to one gender. However, there are quite a few studies that point to the fact that loss aversion has a relatively more negative impact on female, vice versa, ceteris paribus. In the situation of children, quite a lot studies have proved that endowment effect will not work on children unless someone lead them to focus on themselves, however, children will be obviously affected by loss aversion.
... The key difference is that the utility of an alternative is not static. The utility of an alternative at any moment in time can be decomposed into two factors, 1 See for example Harbaugh et al. (2001), Kempf and Ruenzi (2006) and Sprenger (2015). 2 See for example Pliner (1982), Gordon and Holyoak (1983), Bornstein and D'Agostino (1992), Monahan et al. (2000), Harmon-Jones and Allen (2001), Zajonc (2001) and Huang and Hsieh (2013). ...
... That is, after the DM is endowed with the alternative, it is more difficult for him to leave it. There is a plethora of evidence that people incur in the endowment effect, e.g.Harbaugh et al. (2001) andKempf and Ruenzi (2006), here we provide a possible cognitive foundation for such behavioral bias. The exposure effect might be what drives the endowment effect. ...
Article
Full-text available
In this paper we propose a first dynamic model of behavioral inertia. Using evidence from cognitive sciences, we model a decision maker that has a higher probability of choosing an alternative the more he has been exposed to it. The model allows us (i) to give a first explanation for some empirical evidence that shows that inertia in choices is dynamic, (ii) to give a more general description of the well-known phenomenon of the status-quo bias, (iii) to obtain the endowment effect, loss aversion and present bias as byproducts, and (iv) to quantify the behavioral inertia that affects choices. In particular, we show that it is possible to have accurate forecasts of the kind of heterogeneity we should expect to emerge due to the effect of exposure on inertia. Finally, we provide a choice theoretical foundation of the model and we discuss some possible extensions. (JEL D03, D11, D60)
... Nagar et al. (2016) analyze conservatism from an evolutionary point of view and argue that conservatism originated from humans' psychological bias of intrinsic loss aversion that developed through human evolution. Research has found that even very young children ( Harbaugh et al., 2001) as well as primates (Chen et al., 2006) show loss aversion. This bias is considered to be deeply rooted in human beings and seems to be rather innate than learned ( Chen et al., 2006). ...
... Research has also put attention to the question if loss aversion decreases with an increase in experience. Harbaugh et al. (2001) investigate if the endowment effect decreases with age and do not find confirming evidence. Children at the age of five as well as adults at the age of 20 ...
Thesis
Literature suggests that individuals have endogenous preferences for accounting conservatism as compared to neutral accounting due to intrinsic loss aversion (Hirshleifer and Teoh, 2009; Nagar et al., 2016). However, no empirical evidence for this claim exists. This thesis addresses a call for more research on irrational preferences for conservative accounting (Hirshleifer and Teoh, 2009) by providing first experimental insights on individuals’ endogenous preferences for conservative compared to neutral accounting. Accounting conservatism is characterized by demanding higher verification requirements for gains than losses (Watts, 2003a), resulting in a more timely recognition of losses than gains (Basu, 1997). By considering potential future losses up-front, users of accounting information are protected from future disappointment, thereby accounting for individuals’ intrinsic loss aversion (Hirshleifer and Teoh, 2009). Although being a fundamental accounting concept, conservatism has increasingly become a controversial issue. In recent years, standard setters have followed a critical view arguing that conservatism results in biased information, concealing true performance. They currently put forward neutral, i.e. symmetric accounting (IASB, 2010, CF; IASB, 2015, CF ED) with the objective of providing accounting information that is more useful to users. In the experiment conducted in this thesis, the case of accounting for research and development (R&D) expenditures serves as an example for variants of different degrees of conservatism. Immediate expensing of R&D expenditures is a typical example for conservative accounting (Beaver and Ryan, 2005). Capitalizing R&D expenditures, on the other hand, represents neutral accounting by symmetrically matching the investment outlay with the future benefits derived from the investment. Participants are in their investor role and make investment decisions in a judgment (between-subjects design) as well as a choice setting (within-subjects design). Results support expectations: individuals show preferences for conservative relative to neutral accounting – especially after prior loss experiences. Evidence suggests that conservatism can better address individuals’ loss aversion. Mentally processing potential losses is more comfortable under conservative than under neutral accounting. These insights contribute to the ongoing discussion on accounting conservatism by establishing that a disregard for peoples’ endogenous preferences for conservatism associated with neutral accounting can have detrimental economic consequences, such as a lower willingness to invest in firms applying neutral accounting.
... In addition to private goods, such as coffee cups, lottery tickets, and chocolates (e.g., Knetsch and Sinden, 1984;Kahneman et al., 1990), people also demonstrate the endowment effect for public goods, such as air quality and guidance services (MacDonald and Bowker, 1994;Bischoff, 2008). Besides adults, young children and nonhuman primates also demonstrate the same bias (Harbaugh et al., 2001;Venkat et al., 2008). Therefore, it has been called "one of the most important and robust empirical regularities to emerge from the field" and is referred to as "the most robust finding in the psychology of decision making" (Loewenstein and Issacharoff, 1994;Knetsch et al., 2001). ...
... Apicella et al. (2014) demonstrated evolutionary origins of the endowment effect based on evidence from huntergatherers. Evolutionary origins have been an explanation of this effect (Harbaugh et al., 2001;Venkat et al., 2008). In the current study, based on the correction between the MPFC and this effect, we demonstrated a causal relationship between them, which might offer evidence for its evolutionary significance. ...
Article
Full-text available
Endowment effect – the observation that people appear to attach more value to possessions than non-possessions – has been replicated in numerous experimental studies. Previous neuroimaging studies revealed that the medial prefrontal cortex (MPFC) plays a role in the endowment effect. To assess the possibility of a direct causal relationship between the activity of MPFC and the endowment effect, we used transcranial direct current stimulation (tDCS) to transiently alter the neural activity in MPFC. Subsequently, in three stimulation treatments, we assessed the presence of the endowment effect, which was demonstrated by a disparity between willingness to accept (WTA) and willingness to pay (WTP). The results indicated that the participants demonstrated the endowment effect for a mug in the anodal and sham treatments, whereas no endowment effect was observed in the cathodal treatment. Similarly, endowment effect was observed for the other item (notebook) in the anodal treatment, whereas no endowment effect was observed in the sham and cathodal treatments. In addition, the participants tended to sell higher and buy lower after receiving anodal tDCS over MPFC and buy higher after receiving cathodal tDCS over MPFC. As a result, the present study demonstrated a direct causal relationship between the activity of MPFC and the endowment effect.
... For example, studies have shown that children consider their objects to be significantly more valuable than similar non-owned objects and exact replicas, even if they were recently assigned to the child at random (e.g. Gelman, Manczak, & Noles, 2012;Harbaugh, Krause, & Vesterlund, 2001;Hartley & Fisher, 2018). To our knowledge, the present findings are the first to demonstrate children's belief that ownership history can enhance the value of materially cheap items to match (and, for older children, potentially exceed) that of materially expensive items, emphasising the importance of ownership to developmental cognition. ...
... Another study compared endowment in children with OCD (7 − 18yo) who had higher versus lower hoarding tendencies. This task initially endowed children with an item that they would subsequently keep or switch with another one of similar value (as in Knetsch, 1989;Harbaugh, 2001). Children with higher hoarding tendencies did more often keep their initial endowed item, but the analyses were non-parametric comparisons within groups that did not directly contrast groups, low hoarding children did not replicate the endowment effect, the sample was small, and there were no healthy control participants (Wetzel, 2016). ...
Article
Full-text available
Introduction People exhibit a strong attachment to possessions, observed in behavioral economics through loss aversion using new items in the Endowment or IKEA effects and in clinical psychology through pathological trouble discarding domestic items in Hoarding Disorder. These fields rarely intersect, but both document a reticence to relinquish a possessed item, even at a cost, which is associated with feelings of loss but can include enhanced positive states as well. Methods To demonstrate the shared properties of these loss-related ownership effects, we developed the Pretzel Decorating Task (PDT), which concurrently measures overvaluation of one’s own over others’ items and feelings of loss associated with losing a possession, alongside enhanced positive appraisals of one’s items and an effort to save them. The PDT was piloted with 31 participants who decorated pretzels and responded to their own or others’ items during functional neuroimaging (fMRI). Participants observed one item per trial (self or other) and could work to save it (high or low probability loss) before learning the fate of the item (trashed or saved). Finally, participants rated items and completed hoarding tendency scales. Results The hypotheses were supported, as even non-clinical participants overvalued, viewed as nicer, feared losing, and worked harder to save their items over others’—a response that correlated with hoarding tendencies and motor-motivational brain activation. Our region of interest in the nucleus accumbens (NAcc) was engaged when viewing one’s own items to the extent that people worked harder to save them and was more active when their items were saved when they felt emotionally attached to possessions in real life. When their items were trashed, NAcc activity negatively correlated with trouble discarding and emotional attachments to possessions. Right anterior insula was more active when working to save one’s own over others’ items. Extensive motor-motivational areas were engaged when working to save one’s own over others’ items, including cerebellum, primary motor and somatosensory regions, and retrosplenial/parahippocampal regions—even after controlling for tapping. Discussion Our attachments to items are emotional, continuous across typical and pathological populations, and drive us to save possessions that we value.
... For example, when 2-and 3-year-olds are told an object is theirs, they say they prefer it over other objects, including objects that look identical and those that are distinct but equally desirable (Gelman et al. 2012; but see Gelman et al. 2014). Also, children aged 5 and older typically prefer keeping their own objects and reject offers to trade these for different items (Harbaugh et al. 2001, Hartley & Fisher 2018, Lehman et al. 1995; see also Hood et al. 2016). 4 Owning objects also affects valuations that run deeper than liking. ...
Article
Ownership and value go together, and understanding both is imperative for children to know how to act in socially appropriate and advantageous ways. This paper reviews how children come to think about ownership and value. We first review how children consider history, labor, and control when inferring whether objects are owned and to whom they belong. We then review how children conceive of ownership rights and how they use ownership to anticipate other people's actions, feelings, and knowledge. With value, we first touch on children's attention to physical features and norms. We then discuss how ownership impacts children's valuations of objects, stemming both from children's own status as owners and from their knowledge of previous ownership. We also review how various kinds of distinctive histories affect children's valuations. Finally, we review children's understanding of how value depends on the market forces of supply and demand.
... The endowment effect has been investigated in various areas due to its implications for rational decisionmaking. The researches showed that the endowment effect can appear in a variety of situations, not only for adults involved in economic activities or transactions, but even on children or monkeys (Harbaugh et al., 2001;Kanngiesser et al., 2011;Lakshminaryanan et al., 2008). In the investigated literature we came across two fundamental approaches on how the endowment effect is triggered. ...
... Our participants' heightened valuation of objects associated with the self reflects the findings of many developmental behavioral studies documenting ownership effects (e.g. Harbaugh et al., 2001) and supports the extended-self hypothesis (Belk, 1988). Association with a beloved relative may also be sufficient to increase the perceived monetary value of an object, albeit to a lesser degree than association with a famous owner. ...
Article
Full-text available
Autism spectrum disorder may reduce children's sensitivity to authenticity when valuing objects. Here, we investigate how autistic adults value authentic objects and how their judgements are influenced by ‘need to belong’ (NTB). Autistic adults (N = 41) and neurotypical adults (N = 89) answered questions about pairs of objects that differed on various authentic qualities. The groups did not differ in their awareness that authenticity mediates monetary worth and others’ perceptions of an object’s owner. However, the influence of authenticity was somewhat suppressed in autistic adults, who were generally less happy to own objects. Across populations, higher NTB was associated with increased desire to own objects and increased happiness associated with owning authentic objects specifically. These findings suggest that sensitivity to the value of authenticity could be developmentally delayed in autism, but differences in subjective appraisals of authentic objects may be a lifelong characteristic.
... If the results of Harbaugh et al. [7] and the study by Saïbou-Dumont [8] showing that Saramaca children (in French Guyana) after three years of schooling exhibit an endowment effect, coincide, then 10-year-old Kanak children should exhibit the endowment effect, regardless of the environment in which they live. ...
... In addition to assessing owner identification accuracy, Gelman et al. (2012) also asked participants to indicate which objects they and the experimenter preferred. It is well-documented that neurotypical children consider their property to be more valuable, desirable, and memorable than similar non-owned property (Harbaugh et al., 2001;Hartley & Fisher, 2018;Hood & Bloom, 2008). Establishing ownership forges a mentalistic connection between a person and an object, and because people tend to view themselves favourably, this can trigger the transfer of positive self-perceptions to self-owned property (Hood et al., 2016). ...
Article
Full-text available
This study investigated how ownership identification accuracy and object preferences in children with autism spectrum disorder (ASD) are influenced by visual distinctiveness and relative desirability. Unlike typically developing (TD) children matched on receptive language (M age equivalents: 58.8-59.9 months), children with ASD had difficulty identifying another person's property when object discriminability was low and identifying their own relatively undesirable objects. Children with ASD identified novel objects designated to them with no greater accuracy than objects designated to others, and associating objects with the self did not bias their preferences. We propose that, due to differences in development of the psychological self, ownership does not increase the attentional or preferential salience of objects for children with ASD.
... For example, Knetsch and Sinden (1984) speculated that the endowment effect would generalize broadly, despite using a model that did not permit generalization beyond students at the University of New England trading lottery tickets for $3 in the year 1984. Later research iteratively modified this generalization scope, showing that the endowment effect extends across goods (e.g., Rowe, D'Arge, & Brookshire, 1980;van Dijk & van Knippenberg, 1998), age groups (Harbaugh, Krause, & Vesterlund, 2001), cultures (Maddux et al., 2010), and species (Lakshminaryanan, Keith Chen, & Santos, 2008), but is limited by market features (Kahneman, Knetsch, & Thaler, 1990), learning (Apicella, Azevedo, Christakis, & Fowler, 2014Coursey, Hovis, & Schulze, 1987), and expertise (List, 2003). At the risk of overgeneralizing from a single example, this shows that the familiar, messy process of iterative science is in some cases capable of untangling the causal structure of social phenomena. ...
Article
Emphasizing the predictive success and practical utility of psychological science is an admirable goal but it will require a substantive shift in how we design research. Applied research often assumes that findings are transferable to all practices, insensitive to variation between implementations. We describe efforts to quantify and close this practice-to-practice gap in education research.
... For example, Knetsch and Sinden (1984) speculated that the endowment effect would generalize broadly, despite using a model that did not permit generalization beyond students at the University of New England trading lottery tickets for $3 in the year 1984. Later research iteratively modified this generalization scope, showing that the endowment effect extends across goods (e.g., Rowe, D'Arge, & Brookshire, 1980;van Dijk & van Knippenberg, 1998), age groups (Harbaugh, Krause, & Vesterlund, 2001), cultures (Maddux et al., 2010), and species (Lakshminaryanan, Keith Chen, & Santos, 2008), but is limited by market features (Kahneman, Knetsch, & Thaler, 1990), learning (Apicella, Azevedo, Christakis, & Fowler, 2014Coursey, Hovis, & Schulze, 1987), and expertise (List, 2003). At the risk of overgeneralizing from a single example, this shows that the familiar, messy process of iterative science is in some cases capable of untangling the causal structure of social phenomena. ...
Article
Yarkoni's analysis clearly articulates a number of concerns limiting the generalizability and explanatory power of psychological findings, many of which are compounded in infancy research. ManyBabies addresses these concerns via a radically collaborative, large-scale and open approach to research that is grounded in theory-building, committed to diversification, and focused on understanding sources of variation.
... This refusal to exchange is observed in young children (Harbaugh et al., 2001;Horowitz and McConnell, 2002;Lucas et al., 2008;Da Silva et al., 2014) and also in certain nonhuman primates (Lakshminaryanan et al., 2008;Kanngiesser et al., 2011;Brosnan et al., 2012;Flemming et al., 2012, to cite a few). It is considered a rationality bias with respect to the prescription of standard economic theory which states that individuals' preferences over goods are independent of whether or not they posses it. ...
Article
Full-text available
In this paper, Knetsch's exchange paradigm is analyzed from the perspective of pragmatics and social norms. In this paradigm the participant, at the beginning of the experiment, receives an object from the experimenter and at the end, the same experimenter offers to exchange the received object for an equivalent object. The observed refusal to exchange is called the endowment effect. We argue that this effect comes from an implicature made by the participant about the experimenter's own expectations. The participant perceives the received item as a gift, or as a present, from the experimenter that cannot be exchanged as stipulated by the social norms of western politeness common to both the experimenter and the participant. This implicature, however, should not be produced by participants from Kanak culture for whom the perceived gift of a good will be interpreted as a first act of exchange based on gift and counter-gift. This exchange is a natural, frequent, balanced, and indispensable act for all Kanak social bonds whether private or public. Kanak people also know the French social norms that they apply in their interactions with French people living in New Caledonia. In our experiment, we show that when the exchange paradigm takes place in a French context, with a French experimenter and in French, the Kanak participant is subject to the endowment effect in the same way as a French participant. On the other hand, when the paradigm is carried out in a Kanak context, with a Kanak experimenter and in the vernacular language, or in a Kanak context that approaches the ceremonial of the custom, the endowment effect is no longer observed. The same number of Kanak participants accept or refuse to exchange the endowed item. These results, in addition to providing a new explanation for the endowment effect, highlight the great flexibility of decisions according to social-cultural context.
... dotación disminuiria. Sin embargo, los experimentos realizados por Harbaugh, Krause, & Vesterlund (2001) demuestran que al aumentar la experiencia de los sujetos, las variaciones en el efecto dotación no son significativas, y por ello, no podría considerarse que la presencia de éste fuese una mera equivocación. Es improbable que haya una simetría entre la magnitud de la divergencia entre la WTA y la WTP, la falta de experiencia en algunos sujetos y el mejor uso de estrategias de negociación; en otras palabras, si los individuos sin experiencia en el mercado tienden a negociar muy poco, lo cual revelaría una diferencia (medible) entre la WTA y la WTP entonces ¿por qué la magnitud de dicha divergencia respecto de individuos con experiencia es practicamente la misma? ...
Chapter
Full-text available
Varios estudios de las últimas dos décadas que basados en el behavioral economics, evidencian la persistencia del "efecto dotación". A partir de esta anomalía cognitiva han cuestionado las predicciones teóricas del Teorema de Coase incluso en su formulación más elemental. El presente documento sintetiza las evidencias sobre la recurrente y predecible incidencia de esta anomalía en la toma de decisión y cómo ocurre en múltiples situaciones tanto experimentales como en el mundo real. El documento también señala las posibles implicaciones del "efecto dotación" respecto del análisis económico en sí, particularmente la explicación de la insalvable divergencia entre la disposición a aceptar (WTA) por ceder un derecho y la correlativa disposición a pagar (WTP) por obtener el mismo derecho. Se señala además una contradicción con el supuesto de la economía neoclásica sobre la reversibilidad de las preferencias que se ubican sobre una misma curva de indiferencia. Todo lo anterior, con el fin de destacar que el "efecto dotación" si permite predecir cómo se comportan las personas y argumentar como esta anomalía cognitiva evidencia varias inconsistencias del pronóstico y de las recomendaciones que suele sugerir el Teorema de Coase, independiente de existen o no existen costos de transacción, y sea que la solución legal se dirija o no a reducirlos. Finalmente, se sugiere una hipótesis que considera que la razón por la que persiste el "efecto dotación" en la toma de decisiones, está incluso relacionada con factores evolutivos. Palabras claves: Economía comportamental, Análisis Económico del Derecho, efecto dotación, Teorema de Coase, derecho de propiedad, toma de decisiones.
... Most importantly for present purposes, ownership affects children's own regard for objects. They like their possessions more than objects that are not theirs and value them more in transactions-they show the "mere ownership" and "endowment" effects (e.g., Gelman et al., 2012;Harbaugh et al., 2001;Hartley & Fisher, 2018;Irwin & Gebhard, 1946; also see Gelman & Echelbarger, 2019). However, when attractiveness and ownership are pitted against one another, children usually give more weight to attractiveness-they like unowned attractive objects more than their own possessions, and similarly expect others to prefer attractive objects over their own (Gelman et al., 2012;Goulding & Friedman, 2018;Pesowski & Friedman, 2018; but see Gelman & Davidson, 2016 for an exception). ...
Article
Liking one object more than another does not guarantee caring about it more, and vice-versa. Here we show that with age, children increasingly distinguish between these two ways of valuing objects. We conducted three experiments on 589 children and 415 adults. In Experiment 1, 3–7-year-olds and adults chose between their own plain sticker and another more attractive one. Among 6−7-year-olds and adults, choices of the plain sticker were relatively more common for caring than liking. In Experiment 2, 3−6-year-olds and adults inferred what others care about and like. Among 4−6-year-olds and adults, choices of a plain object owned by another person were relatively more common in inferences about caring than liking. However, children chose the owned objects at low rates, raising the possibility that children had predominantly based judgments on the relative attractiveness of the objects. Experiment 3 addressed this concern by examining judgments about identical-looking objects.
... Adversity to loss has been proven a relatively common and robust behavior tendency supported by a significant amount of research (e.g., Ariely et al., 2005;Camerer, 2005;Novemsky and Kahneman, 2005). Recent studies into the neuro science of non-human primates (Chen et al., 2006), young children (Harbaugh et al., 2001), and adults (Tom et al., 2007) suggest loss aversion may be deeply rooted in brains. From the human evolution perspective, this suggests humans may be hardwired to be loss averse -the loss of a day's food could cause death, while the gain of an extra day's food might not cause an extra day of life, unless the food can be easily stored. ...
Article
Full-text available
Although loss aversion has been shown to be a pervasive phenomenon in economics, business, and management, measuring individual loss aversion tendency has proven challenging because it requires complex and lengthy experiments and data collections. To address this, this study develops a seven-item loss aversion scale, which is simple and unidimensional. The study validates the scale by correlating it with two other decision-making tendency scales – risk aversion and risk propensity, and tests the predictive validity through two behavioral tendency statements (i.e., the sunk cost fallacy and the endowment effect) and four lottery games. The overall results suggest that the scale is a reliable and valid instrument that can be used to assess an individual’s loss aversion tendency in place of more complex behavioral experiments. The paper discusses the managerial implications of the scale in various business areas and suggests future research directions for further validating the scale.
... Adversity to loss has been proven a relatively common and robust behavior tendency supported by a significant amount of research (e.g., Ariely et al., 2005;Camerer, 2005;Novemsky and Kahneman, 2005). Recent studies into the neuro science of non-human primates (Chen et al., 2006), young children (Harbaugh et al., 2001), and adults (Tom et al., 2007) suggest loss aversion may be deeply rooted in brains. From the human evolution perspective, this suggests humans may be hardwired to be loss averse -the loss of a day's food could cause death, while the gain of an extra day's food might not cause an extra day of life, unless the food can be easily stored. ...
... Adversity to loss has been proven a relatively common and robust behavior tendency supported by a significant amount of research (e.g., Ariely et al., 2005;Camerer, 2005;Novemsky and Kahneman, 2005). Recent studies into the neuro science of non-human primates (Chen et al., 2006), young children (Harbaugh et al., 2001), and adults (Tom et al., 2007) suggest loss aversion may be deeply rooted in brains. From the human evolution perspective, this suggests humans may be hardwired to be loss averse -the loss of a day's food could cause death, while the gain of an extra day's food might not cause an extra day of life, unless the food can be easily stored. ...
... In other words, the dynamic evolution of a city's morphology depends on the individual behaviors associated with land development and the interaction modes between them [45]. More often than not, unhappiness or pain caused by losing an existing wealth tends to outweigh happiness from gaining a wealth [46]. is so-called endowment effect applies to everybody and will not decrease with the increase of age, experience, and other factors [47]. Kahneman's prospect theory explains the endowment effect in a way that the value function curve is concave in the gain area and convex in the loss area, with the value function curve of the loss area being steeper than that of the gain area. ...
Article
Full-text available
With the rapid development of urbanization, the urban expansion morphology has been changing with complex driving mechanisms behind the urban evolution process. This article simulates the results of urban land development contingent upon decision-makers’ risk preferences and reveals the inherent law of the effect of risk preferences on urban expansion morphology. Results show that cautious decision-makers lead to the urban expansion morphology being relatively compact, and the reckless decision-makers lead the urban expansion to sprawl. Moreover, there are obvious differences in strengths of planning constraints on the decision-makers with different risk preferences. The reckless decision-makers, driven by the economic interests, are more likely to break through the planning, especially when the planning is not reasonable. It is also found that enhancing executive ability of planning for the reckless decision-makers can promote compactness of the urban expansion morphology. However, the effect of enhancing executive ability of planning on the cautious decision-makers is limited. Thus, in the case of unreasonable planning, the executive ability of planning to the reckless decision-makers should be enhanced so as to avoid urban sprawl.
... However, evidence that ASD influences important aspects of ownership-related cognition could signpost potential differences in understanding of ownership rights. In experiment 1 of Hartley and Fisher (2018a), TD children showed a clear preference for their randomly assigned toy and traded infrequently (demonstrating a "mere ownership effect"; Gelman et al. 2012;Harbaugh et al. 2001) while children with ASD often traded for a different object that they preferred. In subsequent experiments, children with ASD did not over-value selfselected toys in comparison to identical copies, or over-value randomly assigned toys in comparison to different otherowned toys or identical copies. ...
Article
Full-text available
This study investigated how autism spectrum disorder (ASD) impacts children’s ability to identify ownership from linguistic cues (proper nouns vs. possessive pronouns) and their awareness of ownership rights. In comparison to typically developing (TD) children matched on receptive language (M age equivalents: 53-56 months), children with ASD were less accurate at tracking owner-object relationships based on possessive pronouns and were less accurate at identifying the property of third parties. We also found that children with ASD were less likely to defend their own and others’ ownership rights. We hypothesise that these results may be attributed to differences in representing the self and propose that ASD may be characterised by reduced concern for ownership and associated concepts.
... In the area of individual differences in susceptibility to the effect, we can identify eight relevant papers, of which we provide an overview in Table 3 Appendix 2. This includes the publication of Harbaugh et al. (2001), which deals with differences in age. The authors were able to find evidence for the endowment effect in every age group, although they could not demonstrate that the effect changes with age. ...
Article
Full-text available
The focus of this paper is to link two subjects that at first glance seem to have only little in common: decision-making in price management and cross-context individual differences in the susceptibility to biases. Individual differences have largely been ignored in research so far. It is striking that clear lines of research are difficult to identify, whereby these missing connections make future research much more difficult. In order to counteract this, we provide a comprehensive review of the literature on individual differences through cognitive biases focussing on five biases that can be presumed as relevant for the price management process.
... On the other hand, children may be less willing to accept unequal trades to obtain preferred items than they predict others are, and thus accept fewer unequal trades for themselves. Indeed, we know that children show endowment effects (Harbaugh, Krause & Vesterlund, 2001), wanting more for their own items than they would pay for the same item from someone else. ...
Article
Full-text available
Trading is a cornerstone of economic exchange and can take many different forms. In simple trades, one item is often exchanged for another; but in more complex trades, agents can trade different numbers of items, reflecting the differing value of the items being traded. Though young children regularly engage in simple trades, we examine whether they understand a key element involved in more complex trades—the idea that people may subjectively value the same item differently and accept trades that numerically disadvantage themselves in the service of acquiring more of a preferred item. To do so, we ran three studies with 5- to 10-year-old children (N = 314) in which they were asked to predict whether a third party would accept or reject different types of trades. Results revealed that children across this age range predict that a third party will accept a numerically disadvantageous trade when they prefer one resource over another, but not when they have an equal preference for both resources. Importantly, their predictions were not merely a reflection of what they thought was fair, but rather what was in the best interest of the third party—they thought a third party would be more likely to accept an “unfair” trade that benefitted himself rather than someone else. We discuss our findings in terms of what they reveal about children’s early economic intuitions.
... Unlike adults, preschoolers and young children do not consistently prefer their possessions over other objects. Some studies find they do have such preferences (Gelman, Manczak, & Noles, 2012;Harbaugh, Krause, & Vesterlund, 2001), but other studies find children do not (Hood, Weltzien, Marsh, & Kanngiesser, 2016;Lucas, Wagner, & Chow, 2008). 1 Moreover, preschoolers do not anticipate that other people like their own possessions over other objects (Gelman et al., 2012;Pesowski & Friedman, 2018), and they readily acknowledge that people can own things they dislike (Noles & Gelman, 2014). Finally, we might also expect differences in children's judgments about future ownership and liking because children draw on different cues and principles when inferring ownership and preferences (e.g., Malcolm, Defeyter, & Friedman, 2014;Verkuyten, Sierksma, & Thijs, 2015;Verkuyten, Sierksma, & Martinovic, 2015) and when explaining them (Nancekivell & Friedman, 2014). ...
Conference Paper
The ability to anticipate the future improves markedly across the preschool years. One major area of improvement is in chil-dren's ability to consider their future preferences. Whereas 5-year-olds understand they will prefer adult items in the future , 3-year-olds indicate they will continue to prefer child items. In the present research, we show that preschoolers (N=120) show an ownership-advantage in their future-oriented thinking-they are better able to indicate which objects they will own as adults than to indicate what they will like. These findings are informative about the basis for children's difficulty anticipating their future preferences, and also reveal differences between how children think about ownership and preferences .
... The effect has been documented in human children (Harbaugh, Krause, & Vesterlund, 2001), and across both eastern and western cultures (Maddux et al., 2010). There is even strong evidence of the endowment effect in captive capuchin monkeys (Lakshminaryanan et al., 2008) and all four great ape species (Brosnan et al., 2007;Kanngiesser, Santos, Hood, & Call, 2011;Brosnan, Jones, Gardner, Lambeth, & Schapiro, 2012), though the effect in apes appears to apply only to a narrow class of commodities -primarily food. ...
Preprint
Full-text available
People often value an item more when they own it than when it is available for purchase, and consequently are relatively reluctant to trade. This is the "endow-ment effect", which has been widely documented in human populations and also in some non-human species. This paper develops a simple model in which it is adaptive to have a bias against trade, potentially explaining the basis of the endowment effect. The bias against trade arises from the strategic nature of trade in a moderately competitive environment: the interest of a potential trading partner in making the exchange is evidence that the decision maker already has the more valuable object. The model predicts that an endowment effect is promoted by large uncertainty about the fitness value of items, and also by conditions in which there are on average small gains to be had from trade. Because the model employs a simple bounded rationality heuristic for trade, it explains how the endowment effect could arise in species that lack theory of mind and related strategic reasoning abilities. The model also suggests an explanation for why endowment effects are so rarely observed in biological markets that exist between species. Because the trading classes have very different fitness functions, there is negligible competition across those classes. Consequently, there are substantial mutual gains to trade, so our model predicts there is unlikely to be adaptive pressure for an endowment effect.
... Both male and female respondents, whether they work in the construction sector as consultants, contractors, or clients and no matter their years of experience, are likely all influenced by EE. This is consistent with previous reported studies that found that repetitions of trade-offs and opportunities to learn would not eliminate the impact of EE (Knetsch and Sinden 1987;Harbaugh et al. 2001). ...
Article
Full-text available
Endowment effect (EE) describes the phenomenon that people require more to relinquish items they own than they are willing to pay for the same. This can be explained by the tendency of people to overvalue their belongings, properties, opinions, and decisions. Thus, the happenings of EE undermine rational choices. This study examines the happenings of EE in construction project dispute resolution (CPDR). Four sources of EE were identified from the literature: ownership, loss aversion, status quo bias, and strategic bargaining habits. The sources of EE were operationalized as CPDR manifestations. With data collected from construction practitioners, the occurrence of EE manifestations was confirmed. It was further unveiled that construction dispute parties from different construction sectors displayed a similar extent of EE behaviors in CPDR. This study contributes to CPDR practices by suggesting the involvement of third-party neutral advisors throughout the project duration to minimize the effects of EE. With their professional, impartial, and objective reminders, disputing parties’ unrealistic expectations would be reviewed.
... For more than thirty years, the endowment effect has been reliably observed across studies involving children (Harbaugh, Krause, & Vesterlund, 2001), adults (see Morewedge & Giblin, 2015 for a review) and has also been demonstrated in primates (Lakshminaryanan, Chen, & Santos, 2008). Early studies had suggested that loss aversion was the basis for the difference between buying and selling price (e.g., Tversky & Kahneman, 1991), but more recent research places greater emphasis on the role of self in driving this effect (Beggan, 1992;Gawronski et al., 2007;Maddux et al., 2010;Morewedge et al., 2009;Morewedge & Giblin, 2015). ...
Article
An object one owns is typically more highly valued than an equivalent object owned by another person. This endowment effect has been attributed to the aversion of loss of one's possessions (through selling), or the added value of an item due to self-association (through owning). To date, investigation of these mechanisms has been hampered by the between-subjects methodology traditionally employed to measure endowment. Over two experiments, we report a novel within-subjects method for measuring an endowment bias. In these studies, Western participants showed enhanced valuation of owned items, whereas East-Asian participants did not. This endowment bias also correlated with the ownership effect in memory (a measure of self-referential processing) in Western, but not East-Asian participants. Our results suggest that the endowment effect is partly predicated on the same factors that influence the ownership effect and that this commonality is likely linked to conceptions of ownership specifically, and self-concept more generally.
... The endowment effect has been investigated in various areas due to its implications for rational decisionmaking. The researches showed that the endowment effect can appear in a variety of situations, not only for adults involved in economic activities or transactions, but even on children or monkeys (Harbaugh et al., 2001;Kanngiesser et al., 2011;Lakshminaryanan et al., 2008). In the investigated literature we came across two fundamental approaches on how the endowment effect is triggered. ...
Article
Full-text available
Online sales increase at incredible paces, all over the world, and so are corresponding marketing efforts. One of the main deterrents of online selling is related to the impossibility of trying or touching products before taking the decision to buy. Previous studies on offline environments have proved that touching products makes people develop a feeling of ownership, a psychological sense of property that has positive consequences on their intention and decision to buy those products. Similar effects, adapted for the online environments, were less investigated, but the very few existent studies suggest that virtually touching a product through tactile interfaces (smartphone, iPad, tablet etc.) could be as important for consumer decisions as the content of the site and product information. Virtual touching could serve as emotional triggers, leading to feelings of ownership and endowment effects in online marketing. However, defining the concept of “virtual touching” is difficult – even the simple association of “touch” and “virtual” seems oximoronic. The purpose of the present study – a literature review type – is to investigate the tactile based creative online marketing, in order to conceptualize and operationalize the variable „virtual touching”, thus being able to further suggest a research design which would enable us to measure the impact of online „touching” on consumer behaviour. The main analysed constructs related to virtual touching are: endowment effect, psychological ownership, haptic advertising, sensory online marketing, haptic imagery, haptic technology, reverse electrovibration.
... Loss aversion has not only been observed in human adults, but also for children [26], and even for capuchin monkeys [27,28]. Given its pervasiveness, this suggests that loss aversion might be an evolutionarily evolved cognitive strategy, and hence part of our neurological inheritance. ...
Article
Full-text available
Reliable decarbonisation policies can only be developed with a thorough understanding of how consumers choose between energy technologies. Current energy models assume optimal consumer decisions which may result in expectations of the effectiveness of climate policies that are far too optimistic. Prospect Theory, on the other hand, aims to model real-life choices, based on empirical observations that losses have a relatively larger influence on decisions than gains, relative to a reference point. Here, we show for the first time how loss aversion can be included into a global energy model with high spatial resolution, using heating technology uptake as a case study. We simulate the future heating technology diffusion for 59 world regions covering the globe, with and without the consideration of loss aversion. We find that ignoring the implications of loss aversion overestimates the market uptake of renewables, in individual countries as well as on the global level. As a consequence , loss aversion results in higher projected CO 2 emissions by households, and the need for much stronger policy instruments for achieving decarbonisation targets. In the case of residential heating, a carbon tax of 200 €/tCO 2 is projected to reduce overall emission levels to a similar extent than a carbon tax of 100 €/tCO 2 without the consideration of loss aversion. Even for similar degrees of decarbonisation, accounting for loss aversion implies substantial changes in the underlying technology composition: technology choices become subject to a 'conservative shift' towards low-carbon technologies which are relatively less efficient, but already more established in local markets.
Article
The asymmetric dominance effect (or decoy effect) is a decision‐making phenomenon that occurs when preference for a target alternative shifts with the addition of a similar, yet inferior alternative dubbed the decoy. Despite the considerable number of studies examining the decoy effect with adult humans and animals, there is comparatively less research on context effects within the developmental domain. In this study, we explored the impact of a decoy on choice behavior by young children (3–9 years old) using a preferential choice task as well as a perceptual discrimination task. Introduction of an inferior decoy impacted choice behavior across 2‐alternative (binary) versus 3‐alternative (trinary) sets, such that inclusion of the dominated decoy in expanded sets decreased selection of the superior target alternative. This pattern of results indicates a reversal of the standard attraction effect, also known as the repulsion effect. We discuss these findings in light of the adult and comparative literatures on decoy effects as well as call for additional developmental studies exploring the impact of inferior alternatives in multialternative decision‐making.
Conference Paper
The use of dark patterns has become ubiquitous within digital platforms. It has been argued that to address this issue, there is a need to integrate ethics education within design pedagogy and practice. This paper reports a lab protocol study conducted to observe if and how sensitizing design students about the issue can affect their design thinking. For this study, n=15 students attended a 2-hour workshop focused on persuasive HCI design, dark patterns and ethics. Pre/post design sessions following the think aloud protocol were conducted to observe the effects of the workshop. Post-workshop interviews were conducted to gather student perspectives. The data collected from the design sessions was analyzed using the linkography technique. The findings reveal the qualitative nature of ethics related design considerations that emerge when participants are engaged in an ethically nuanced design task. It also shows how ethics sensitization can shape convergent and divergent thinking processes.
Chapter
The endowment effect is the most studied quirk. You value a commodity more after you possess it. What you must be compensated to relinquish it (sell it) is of greater value than what you were willing to give up to possess it. The endowment effect changes your ordering of paths. Distinguish between an anticipated but unrealized endowment effect and an anticipated and realized one. The former, an incorrect belief, leads to flawed choosing; the latter does not. For years, loss aversion was the standard explanation for the endowment effect, cognitive dissonance was a distant second, and ownership/self was either rejected or not considered. In the last fifteen years, the ownership/self has emerged as the forerunner, at least in psychology, and it implies the loss is realized. If realized, for how long? And does it vary with what will be lost (e.g., car vs. spouse)? In closing, I consider whether NBT survives the common quirks.
Article
Ownership of resources can be established by evolved competitive and cooperative mechanisms as explained by the target article. However, there is one aspect of ownership that is not captured by computational models which is important to identity, namely the role of owned items as components of “the extended self” hypothesis.
Article
Cooperation often coexists with defection in social interactions. Individuals may choose non‐cooperation in social dilemmas either out of fear (fear of being exploited by a non‐cooperative player) or out of greed (the desire to increase private payoff by defecting from a cooperative player). However, the developmental trajectories of such motives in social interactions remain unclear. In order to find out how fear and greed influence children's cooperative behaviors differentially, children aged 7 to 11 were tested in Study 1 using a modified repeated one‐shot prisoner's dilemma game (PDG) in which the incentives to be greedy or fearful were parametrically and independently manipulated. Results showed that children were sensitive to the greed effect at age 7 and their sensitivity was stable across middle childhood, while only 11‐year‐old children were significantly affected by fear when the greed level was low. These findings suggest that in the context of PDG, sensitivity to social threat increases with age across middle childhood especially under low temptation to exploit others, and the greed motive may be less influenced by age in this period. By continuing to use the same experiment with young adults, Study 2 revealed that young adults also demonstrated a diminished fear motive when the greed level was low in the PDG. Moreover, the sensitivity to social motives of 11‐year‐olds was comparable to the levels of young adults. Together, the present findings confirm that two different social motives underlie the development of cooperation in middle childhood.
Article
Full-text available
Mere ownership effect is the phenomenon that people tend to value what they own more than what they do not own. This classic effect is considered robust, yet effect sizes vary across studies, and the effect is often confused for or confounded with other classic phenomena, such as endowment or mere exposure effects. We conducted a pre-registered meta-analysis of 26 samples published before 2019 (N = 3024), that resulted in psychological ownership on valuing effect of g ~ 0.55 [0.43, 0.66]. Suggestive moderator analyses supported the use of replica and valuing type as the strongest moderators. Mere ownership effects were different from the null across all moderator categories and in most publication bias adjustments. We consider this as suggestive evidence that psychological owning leads to valuing, yet caution that much more research is needed. All materials, data, and code are available on https://osf.io/fdyqw/
Article
Product return policies are widely utilized to increase customer security in retail markets. As a result, many retailers take various return leniency measures to ease the applicability of product returns for customers, which increases the frequency of returns in the market and has huge economic impacts on retailers. Therefore, it is necessary to accurately understand the impact of return leniency on both retailers’ profit and consumers’ welfare to outline return leniency strategies wisely and maximize profit and social welfare. We present a comprehensive model considering the impacts of major factors influencing customer behavior, such as return leniency, customer heterogeneity, and the endowment effect, in addition to the other frequently researched aspects in the literature (i.e., product expenses, hassle cost, salvage value). Our model calculates the probability of purchasing, keeping, and returning products to demonstrate the impact of return leniency, determining the optimal price and refund levels to optimize the retailer’s expected profit and the consumer’s loss, and optimizing social welfare. We use a set of numerical experiments over a wide range of parameter values that could cover almost all practical circumstances. Among other findings, our analysis shows that return leniency can be beneficial or detrimental to the retailer depending on the product acquisition cost, endowment effect, and product salvage value, which usually increases social welfare up to some level.
Article
Yarkoni's argument risks skepticism about the very possibility of social science: If social phenomena are too causally complex, normal scientific methods could not possibly untangle them. We argue that the problem of causal complexity is best approached at the level of scientific communities and institutions, not the modeling practices of individual scientists.
Article
For adults, ownership is a concept that rests on principles and connections that apply broadly – whether the owner is the self or someone else, and whether the self is giver or receiver. The present studies tested whether preschool children likewise treat ownership in this abstract fashion. In Experiment 1, 20 children and 24 adults were assigned to be either “givers” or “receivers.” They were then asked to identify which items they and the researcher owned. In Experiment 2, 20 children and 24 adults were asked which items they and the experimenter liked best. In both experiments, participants’ judgments were not influenced by their role (giver vs. receiver), but were more adult-like when reasoning about self-owned than other-owned objects. These data suggest that intuitions about property ownership are initially egocentric – biased toward linking objects to one’s self – and then extend to others over the course of development.
Chapter
Two special forms of bias, endowment and reactive devaluation are examined. Endowment effect (EE) describes the phenomenon that people would require more to relinquish items that they own than they would be willing to pay for the same. There are four sources of EE: ownership, loss aversion, status quo bias and strategic bargaining habit. It was further found that construction disputing parties from different construction sectors displayed a similar extent of EE behaviours in CDN. Reactive devaluation (RD) is another well-recognized psychological bias and describes the tendency of downgrading the value of offers proposed by the negotiating counterpart. Five taxonomies of RD behaviours in CDN were identified in this study. These are reluctance to change; doubts about counterpart’s ability; overconfidence; biased information processing and mistrust towards the counterpart. The potency of these taxonomies was validated with confirmatory factor analysis. The findings timely remind the construction dispute negotiators should review settlement offers with an open mind.
Article
Cash is an important means of transaction, generally assumed to be fungible. However, behavioral economics and consumer research show that ‘cash in hand’, physically holding on to cash and then handing it away, affects purchasing decisions. I study how cash in hand influences decisions in a different, but very important domain: savings. Savings accounts are a promising tool for reducing poverty, but the use of savings accounts is often puzzlingly low. Holding on to cash that needs to be physically deposited into a savings account may increase the psychological costs of saving. This study experimentally identifies the causal effect of cash in hand on savings deposits of female microfinance clients in the Philippines. In contrast to many laboratory and several field studies with similar interventions, I do not find reduced savings deposits due to cash in hand.
Article
Adults infer that resources that become scarce over time are in higher demand, and use this “demand inference” to guide their own economic decisions. However, it is unclear when children begin to understand and use economic demand. In six experiments, we investigated the development of demand inference and demand-based economic decisions in 4- to 10-year-old children and adults in the United States. In Experiments 1–5, we showed children two boxes with the same number of compartments but containing different numbers of face-down stickers and varied the information provided about how those differences arose (e.g. that other children had taken the stickers). In separate experiments, we asked children to buy or trade to get a sticker for themselves or to predict what other children would do. We also asked them which set of stickers they thought the other children had preferred to assess their ability to make a demand inference separately from their own choice. Across experiments, children were able to make a demand inference about children's past preferences by 6 years of age. However, children did not use this demand information when making choices for themselves or when predicting what another child would select in the future. In Experiment 6, we adapted the task for adults and found that adult participants inferred that the set containing fewer resources was in higher demand, and selected the higher demand resource for themselves at rates significantly above chance. The overall pattern of results suggests a dissociation between economic inference and economic decisions during early-to-middle childhood. We discuss implications for our understanding of the development of economic reasoning.
Article
The endowment effect involving rural land is one of the most important ways to study the micro-psychology of land policies and is often regarded as a market friction that prevents market clearing and the efficient determination of fair market prices. Meanwhile, the endowment effect usually has a stronger association with a subjective feeling of land ownership than factual ownership. It is necessary, therefore, to consider the change of the endowment effect during the process of land property rights reform to better facilitate market efficiency. On the basis of the “three rights separation” reform in China, we applied behavioral insights into the development of a theoretical framework that analyzes the impact of subjective land ownership on the endowment effect from irrational perspectives. Our theoretical framework and empirical analysis explain how the clarity, integrity, and stability of subjective land ownership under the “three rights separation” system influence the endowment effect on farmers. Using propensity score matching, we found that the clarity, integrity, and stability of subjective land ownership have a strong impact on the increment of the endowment effect. The empirical results prove that appropriate ambiguous land property rights and term limits are necessary and beneficial to control the endowment effect. The findings also remind us to seek an equilibrium point between subjective land ownership clarity, integrity, stability, and the endowment effect when implementing land property rights reform. This study may serve as a reference for introducing behavioral economics into land-use policy optimization in the future.
Chapter
L’objectif de ce chapitre est de présenter l’état d’avancement d’une série de recherches originales développée depuis quatre années par les auteurs, dans le cadre de travaux sur la prise de décision. Ces auteurs se sont intéressés plus particulièrement à l’un des biais cognitifs les plus connus en sciences cognitives : l’effet de dotation. Ces recherches pluridisciplinaires se situent au carrefour de quatre disciplines : l’économie expérimentale, la psychologie cognitive et développementale, le droit et l’anthropologie. Après avoir brièvement rappelé ce qu’est l’effet de dotation et exposé les principales explications classiques, nous présenterons une nouvelle étayée sur la base d’une série d’études. Nous serons conduits à prendre en compte le droit et, plus spécifiquement, le droit coutumier. Il nous faudra également disposer d’une compréhension anthropologique fine pour comprendre la société dans laquelle ces études ont été conduites.
Article
Items with special histories (e.g. celebrity owners) or qualities (e.g. limited editions) are more valuable than similar “inauthentic” items. Typically developing (TD) children privilege authenticity and are particularly influenced by who objects belong to. Here, we explore why children and adults over-value items with special ownership histories and examine how autism spectrum disorder (ASD) affects object valuation. In Studies 1 and 2, TD children perceived items belonging to famous owners (with “good” or “bad” reputations) to be more valuable than similar items belonging to non-famous owners. However, they ascribed significantly higher values to items belonging to famous heroes than infamous villains when compared. Children with ASD did not over-value objects with special ownership histories, but their valuations were moderated by qualities unrelated to ownership (e.g. rarity). In Study 3, adults with ASD assigned high values to authentic items with special ownership histories but were more likely to keep inauthentic objects than neurotypical adults. Our findings show that association with a famous owner is sufficient to increase an item's value for TD children and adults (with and without ASD). The degree of added value may be determined by the famous owner's character for TD children, but not adults. By contrast, children with ASD value objects via a different strategy that prioritizes material qualities over ownership history. However, the awareness of authenticity displayed by adults with ASD suggests that the emergence of ownership history as an important influence on object evaluation may be developmentally delayed in ASD, rather than completely absent.
Article
Full-text available
Contrary to theoretical expectations, measures of willingness-to-accept greatly exceed measures of willingness-to-pay. This paper reports several experiments that demonstrate that this "endowment effect" persists even in market settings with opportunities to learn. Consumption objects (e.g., coffee mugs) are randomly given to half the subjects in an experiment. Markets for the mugs are then conducted. The Coase theorem predicts that about half the mugs will trade, but observed volume is always significantly less. When markets for "induced-value" tokens are conducted, the predicted volume is observed, suggesting that transactions costs cannot explain the undertrading for consumption goods. Copyright 1990 by University of Chicago Press.
Article
Full-text available
The problems associated with accurately measuring the value of a public good in an applied setting are considered. The values obtained from hypothetical elicitation procedures are compared and contrasted with those obtained in a marketplace. When hypothetical measurements are elicited in the field, buying-selling discrepancies similar to those predicted by psychological models of behavior are observed. However, when the market-like elicitation process is repeated, values are more consistent with diminishing marginal utility. The authors cannot reject the hypothesis that these individuals exhibit loss- aversion behavior. The marketplace, however, is a strong disciplinarian of limiting this type of behavior. Copyright 1987 by American Economic Association.
Article
Full-text available
This paper tests the conjecture that the divergence of willingness to pay and willingness to accept for identical goods is driven by the degree of substitution between goods. In contrast to well-known results for market goods with close substitutes (i.e., candy bars and coffee mugs), the authors' results indicate a convergence of willingness-to-pay and willingness-to-accept measures of value. However, for a nonmarket good with imperfect substitutes (i.e., reduced health risk), the divergence of willingness-to-pay and willingness-to-accept value measures is persistent, even with repeated market participation and full information on the nature of the good. Copyright 1994 by American Economic Association.
Article
The prime object of this book is to put into the hands of research workers, and especially of biologists, the means of applying statistical tests accurately to numerical data accumulated in their own laboratories or available in the literature.
Article
Consider data arranged into k 2×2 contingency tables. The principal result is the derivation of a statistical test for making an inference on whether each of the k contingency tables has the same relative risk. The test is based on a conditional reference set and can be regarded as an extension of the Fisher-Irwin treatment of a single 2 × 2 contingency table. Both exact and asymptotic procedures are presented.
Article
In this paper the results of a choice modelling experiment to value increased protection of the Great Barrier Reef in Australia is reported. There are very few previous studies that identify protection values for the Great Barrier Reef, making it difficult to evaluate whether the community benefits from future additional protection measures are larger than the costs involved. The valuation experiment that has been conducted is novel in two important ways. First, different management policies to increase protection have been included as labels in the choice experiment to test if the mechanisms to achieve improvements are important to respondents. Second, the level of certainty associated with predicted reef health has been included as an attribute in the choice profiles, helping to distinguish between outcomes of different management policies. The results show that protection values vary with the policy scope of the improvements being considered. Values are sensitive to whether protection will be generated by improving water quality entering the reef, increasing conservation zones or reducing greenhouse gas emissions, and the level of certainty of outcomes. The average household willingness to pay for five years for each additional 1% of protection is approximately 26.37whenthebroadmanagementoptionstogenerateimprovementswereincludedinthechoicesets.TheseresultscanbeextrapolatedtoatotalvalueheldbyQueenslandhouseholdsof26.37 when the broad management options to generate improvements were included in the choice sets. These results can be extrapolated to a total value held by Queensland households of 132.8M to $171.5M per 1% improvement, depending on the assumptions used about the discount rate.
Article
En la UE se ha estimado que los costes de la congesti�n representan el 2% de su PIB y que el coste de la poluci�n del aire y ruido supera el 0,6% del PIB, siendo alrededor del 90% de los mismos ocasionados por el transporte terrestre. Ante este hecho y el continuo aumento de la demanda del transporte privado frente al p�blico para los desplazamientos, muchos abogan por una conjunci�n de medidas tanto restrictivas como alternativas al uso del coche. Dentro de las primeras se encuentra el establecimiento de un peaje o una tarifa por el uso de las carreteras, medida que aunque desde el punto de vista de la Teor�a Econ�mica es la manera m�s eficiente para corregir el fallo de mercado que supone la congesti�n, desde la visi�n de pol�ticos y del p�blico no goza de gran aceptaci�n. En este trabajo se pretende hacer una simulaci�n de los efectos que tendr�a sobre el bienestar social de la implantaci�n de una medida de este tipo en la Bah�a de C�diz. In the European Union it has been estimated that the congestion cost are the 2% of the gross domestic product and the cost of pollution and noise is over 0,6%, olso it is known that the 90% of this cost are caused by overland transport. For this reason and for the always increasing demand of private transport, there are professionals who thinks that the solution have to be restrictive measures added to alternatives to the car. road pricing is a restrictive measures that for the economic theory is the most efficient way to solve congestion cost but for politicians and user of transport is not always accepted. In this study we are going to simulate road pricing for commuters in the Bah�a of C�diz and then it will be estimated welfare effects.