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The Endowment Effect and Evidence of Non-Reversible Indifference Curves
... Some of the early and most well-known empirical evidence of loss aversion and the endowment effect came from experiments conducted by Knetsch and colleagues. One such study included three groups of undergraduate students who experienced different endowment conditions (Knetsch, 1989). Members of one group were initially given a coffee mug and then ...
... The control group showed an approximately even divide in preference for the two items: 56% of students chose the mug and 44% of students chose the chocolate bar. Canonical economic theory and Coase theorem of rights and ownership (Coase, 1960) (Knetsch, 1989). Knetsch and colleagues attributed these results to loss aversion; that is, once a participant was in possession of the item, they were more averse to the idea of losing or giving up that item than they were attracted to the idea of gaining a different item (Kahneman et al., 1990;Knetsch, 1989). ...
... Canonical economic theory and Coase theorem of rights and ownership (Coase, 1960) (Knetsch, 1989). Knetsch and colleagues attributed these results to loss aversion; that is, once a participant was in possession of the item, they were more averse to the idea of losing or giving up that item than they were attracted to the idea of gaining a different item (Kahneman et al., 1990;Knetsch, 1989). ...
A status quo bias is a tendency to resist change and keep things as they are. This bias is robust in humans and likely a byproduct of heuristic decision-making mechanisms, indicating that it may be an evolutionarily-conserved process that is phylogenetically widespread. However, few status quo bias studies have been conducted with nonhuman animals, and the evidence was mixed. Studying this question with animals could help inform welfare decisions for animals directly and it can shed light on the degree to which a status quo bias (as seen in humans) may be a result of human-unique experiences or the consequence of more fundamental decision-making mechanisms. The goal of this study was to explore whether other primates exhibit a preference for the status quo after controlling for reinforcement history, and to explore the relative influence of several different factors that may moderate the status quo bias effect. To test these questions, I conducted two experiments. In Experiment 1, capuchin monkeys and macaques made choices among computerized tasks, where one task was presented as the ‘default’ option (i.e., it could be played continuously without having to select it from a menu), after forced runs of trials that varied in length and which included trials of either a single task type or a mix of task types. I predicted that the monkeys would demonstrate a general preference for the default task over non- default alternatives, and that this preference would increase in magnitude after longer forced runs of the default task. In Experiment 2, lemurs and tamarins learned that boxes could be opened in two ways (lifting or sliding). I explored whether animals could be influenced to open the box by using one particular mechanism after recent exposure to that mechanism (i.e., establishing it as the ‘status quo’) while controlling overall reinforcement history for both mechanisms. The results indicated that the animals did not exhibit a status quo bias in these paradigms; other factors such as variety and task preference (E1) and approach angle (E2) had greater influence on animals’ choice behavior than the established status quo.
... Experimental designs to investigate the endowment effect are usually based on one of two types of paradigms: an exchange paradigm or a valuation paradigm [5,24]. In the exchange paradigm, participants who are randomly endowed with one of two goods are more reluctant to exchange it for the other good than would be expected by chance [25]. In the valuation paradigm, the maximum amount of money that buyers are willing to pay to acquire the good (i.e., Willingness To Pay, or WTP) is lower than the minimum amount of money that sellers of the good are willing to accept to relinquish it (i.e., Willingness To Accept, or WTA), creating a WTP-WTA gap [5,11,26]). ...
... The endowment effect is a well-established phenomenon in the behavioral sciences, having been replicated dozens of times in different situations [11,25] (perhaps one from above [17]). Our findings add an aspect that has hitherto not been studied, probably also because the economic literature has traditionally been more interested in linear processes (selling by producers or owners and buying by consumers) than in circular processes (which involve reusing and repairing broken products). ...
Repairers may play a substantial role in the shift from a linear (make, use, dispose) to a more circular economy, where resources are continually reused and waste is minimized, which is therefore by definition more sustainable. Repaired defective products are usually reused by their owners or may be traded in a second-hand market. A barrier commonly associated with trading is the endowment effect, which is caused by the difference between the maximum amount buyers are willing to pay for a product and the minimum amount sellers are willing to accept for a product. The present study examined whether second-hand market exchanges face an endowment effect, including in situations where the products are broken and repairers are recruited to repair possible defects in the product. An online survey that randomly assigns participants to one of eight experimental conditions (four product types × two buyer/seller statuses) was used for this study. The results show significant endowment effects for intact products and defective products with a repairer involved, but not for defective products. Furthermore, endowment effects occur for different product types. This suggests that sellers may be reluctant to sell their products in terms of the value that buyers would want to pay for them when repairers are easily accessible, which may impede transactions from taking place. The transaction of broken products may be facilitated by designing a system whereby sellers sell broken products to repairers and buyers buy repaired products from repairers.
... Early papers of referencedependent utility demonstrated that reference points can be manipulated through random assignment of items, suggesting that status quo endowment levels determine reference points. For example, many subjects ex-post prefer an item randomly distributed to them over another item of the same monetary value (e.g., Tversky & Kahneman, 1991;Thaler, 1980;Knetsch, 1989). However, reference point formation may be a complex process, in which additional considerations could enter as well. ...
We study the impact of endowments and expectations on reference point formation and measure the value of food safety certification in the context of fish trading on real markets in Nigeria. In our field experiment, consumers can trade a known food item for a novel food item that is superior in terms of food safety––or vice versa. Endowments matter for reference point formation, but we also document a reverse endowment effect for a subsample of respondents. The effect of expectations about future ownership is weak and mixed. While expectations seem to affect bidding behavior for subjects “trading up” to obtain the certified food product (a marginally significant effect), it does not affect bids for subjects “trading down” to give up this novel food item. Finally, willingness to pay for safety certified food is large for our respondents—our estimate of the premium is bounded between 37 and 53% of the price of conventional, uncertified food.
... Künstliche Intelligenz, wie oben beschrieben, optimiert menschliche intelligente Leistungen (Ertel, 2016). Der Homo Oeconomicus maximiert seinen ökonomischen Nutzen Knetsch, 1989;vgl. Tversky & Thaler, 1990 (Waldmann, 2005(Waldmann, , 2016 ...
Welche Faktoren der psychischen Widerstandsfähigkeit, Resilienz, sind für Führungskräfte in Veränderungen am wichtigsten und welche Maßnahmen helfen zur Resilienzförderung? Hierzu wurden Experteninterviews (N = 10) durchgeführt. Die Experten sind oder waren selbst Führungskraft oder arbeiten im beruflichen Kontext mit Führungskräften zusammen, haben Veränderungen selbst oder im direkten Kontakt zu den Betroffenen erlebt und verfügen über ein grundsätzliches Verständnis von Resilienz. Es wurden sechs Situationen geschildert und nach deren Bewältigung sowie Maßnahmen der Resilienzförderung gefragt. Nach der Auswertung zeigt sich Selbstwirksamkeit (29,01%) als wichtigster Resilienzfak- tor, gefolgt von Reaching Out (22,65%) und Impulskontrolle (15,75%) sowie Resilienzförderung durch psychologische Angebote, Coaching, Training und physi- sche Angebote. Den Resilienzfaktoren Emotionssteuerung, Empathie, Kausalanalyse und Optimismus wurde weniger Bedeutung beigemessen. Ausge- hend von Ergebnissen bisheriger und dieser Studie zeigt sich, dass im Rahmen von Veränderungen in Unternehmen bestimmte Resilienzfaktoren besonders wichtig sind, um die Anforderungen als Führungskraft mental zu bewältigen und dass Resilienzförderung hierbei durch die genannten Maßnahmen als möglich gesehen wird.
... This suggests that a more restrictive policy would decrease the user's utility, resulting in an economic loss to anglers. One explanation for this result is there may be an 'endowment effect' caused by an individual's attachment to a good [20][21][22]. Experimental work by these authors and others (e.g., List, 2003;2004) using everyday goods such as coffee mugs, chocolate bars, and sports cards do indeed find evidence of an endowment effect. ...
This research focuses on the economic component of a bioeconomic model for spotted seatrout in the recreational fisheries on Florida’s west coast. A survey was designed to assess how anglers, who caught or targeted spotted seatrout on Florida’s west coast, valued combined changes in the existing bag limit and size limit. The biological component of the stated preference model deemed such change necessary to ensure a sustainable stock. The biological model provides an economic constraint and results in the treatment of the bag and size limits as a composite good in which separate utilities cannot be measured for each component of the composite good. The stated preference choice method (SPCM) was used to estimate the change in economic value by boat mode of access (e.g., charter boat and private boat). The models also controlled for length of trip (full day versus half-day) for charter boat trips and for type of day (weekend or weekday) for both boat modes of access. Since those who accessed the fishery by private boat had a lower probability of achieving the bag limit/size limit, a model was run to predict the probability of achieving the bag limit/size limit and the probability was interacted with the bag limit/size limit choice. This yielded a positive willingness to pay for the bag limit/size limit combination that was sustainable. Estimated values per person per day for changing the bag limit/size limits to a sustainable level were USD 20.24 for the charter boat mode and USD 32.54 for the private boat mode. Aggregating this to a total value change using a five-year annual average (2012–2016) of total days of fishing for spotted seatrout on Florida’s West Coast yielded an estimate of USD 147.9 million per year for charter boat anglers. The total annual value was about USD 3.4 million, while for private boat anglers the annual value was about USD 144.5 million.
... The result shows that in group 3 there are 56% of students choose to get a coffee mug and 44% of students choose to get 400 grams of chocolate, that means when students have nothing the differences of preference to coffee mug and chocolate is not obvious. But the result of other 2 groups are interesting, there are only 11% of students choose to use coffee mug to exchange with chocolate in group 1 and 10% of students choose to use chocolate to exchange with coffee mug [8]. That is a clear display of endowment effect, most of people think what they have is better than what others have, so they do not want to exchange with others. ...
The basic objective of this paper is to introduce the definition of different psychological biases that included in behavioural finance, find out the reasons why people behave differently in real life financial market from what is understood by traditional finance, elaborate the meaning of apply behavioural finance in people’s daily life, explain the importance of behavioural finance to modern economics. According to different experiments in previous research papers include mug test, caterpillar effect and several famous tests to explain four different categories of behavioural finance which are framing effect, loss aversion, endowment effect and herd instinct. In each categories described the definition, to connect the behaviour with human habits and give the examples to explain the reason of this psychological biases relate to the real financial market. This paper also includes the analysis of the impact of behavioural finance on human decision-making process and the future prospects of behavioural finance to explain and excavate the future research direction, identify drawbacks in current research content.
There is a debate regarding the relationship between standard and behavioral perspectives of Law and Economics. On the one hand, Behavioral Economics could broaden economic theory by explaining the real world of law, as in the case of legal structures of merit goods and altruism. On the other hand, Behavioral Economics may not be needed to explain legal structures that do not maximize wealth, since standard economic theory is well able to do so.Nevertheless, a comparison of two scientific approaches does not necessarily have to imply selecting one theory over the other; rather, it allows the use of both theories in a complementary manner. This research conceptualizes Law and Economics as a Lakatos research programme and analyzes the relationship between Behavioral Law and Economics and the standard approach. The results reveal that, first, Behavioral Law and Economics explains anomalies that are undetected by standard Law and Economics. The behavioral approach is thus not a substitute for the standard perspective, but rather, the two approaches may be complementary. Second, these two theories of Law and Economics examine different, but complementary, aspects of regulation. This article uses the regulation of transportation network companies to illustrate this issue.
Is economics a science? What distinguishes it from other sciences, both natural and social? Like many of the natural sciences, its theories are mathematically complex. Yet, like the social sciences, its 'laws' are largely everyday generalizations. Can such generalizations, which are far from universal truths, constitute a science? Does economics have a distinctive method? The first edition answered these and other questions about the scientific status of economics and its underlying methodology. In this fully updated new edition, Dan Hausman reflects on developments in both economics and the philosophy of economics over the last thirty years. It includes a new chapter on the methodology of macroeconomics, an updated discussion on the use of models, and new discussions causal inference and behavioural economics and their implications for theory appraisal. It is the perfect choice for a new generation of students studying the methodology of modern economics.
Ülkemizde 130'un üzerinde üniversitede (devlet + vakıf) hukuk
fakültesi bulunmakta, 190'ın üzerinde üniversitede ise iktisat eğitimi
sunan iktisat, işletme, iktisadi ve idari bilimler, siyasal bilgiler vb.
muhtelif isimlerde lisans ve lisans-üstü eğitim veren fakülte
bulunmaktadır.
Sayıları giderek artan söz konusu hukuk ve iktisat eğitimi sunan
fakültelerin müfredatında acaba “hukuk ve iktisat” (law and
economics) araştırma programlarına (hukukun iktisadi analizi,
kurallar ve kurumların iktisadi analizi, yeni kurumsal iktisat,
anayasal politik iktisat, mülkiyet hakları iktisadı, suç ve ceza iktisadı
vs.) yer verilmekte midir? Lisans ve lisans-üstü eğitim seviyelerinde
söz konusu araştırma programları ile ilgili dersler mevcut mudur?
Çalışmamızda bu konu ele alınıp değerlendirilecek ve muhtelif
fakültelerin müfredat programları incelenip eksiklikler ele
alınacaktır. Ayrıca, lisans ve lisans-üstü eğitime yönelik alternatif
müfredat önerilerimiz ve hukuk iktisat araştırma programına dair
İngilizce ve Türkçe kaynaklardan derlediğimiz kaynak niteliğinde
birer bibliyografya de sunulacaktır.
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.
The economic theory of the consumer is a combination of positive and normative theories. Since it is based on a rational maximizing model it describes how consumers should choose, but it is alleged to also describe how they do choose. This paper argues that in certain well-defined situations many consumers act in a manner that is inconsistent with economic theory. In these situations economic theory will make systematic errors in predicting behavior. Kanneman and Tversey's prospect theory is proposed as the basis for an alternative descriptive theory. Topics discussed are: undeweighting of opportunity costs, failure to ignore sunk costs, scarch behavior choosing not to choose and regret, and precommitment and self-control.