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Title:Learning to Like What You Have: Explaining the Endowment Effect PDF Logo
Authors:Huck, Steffen
Kirchsteiger, Georg
Oechssler, Jörg
Issue Date:2003
Series/Report no.:Bonn econ discussion papers 2003,5
Abstract:The endowment effect describes the fact that people demand much more to give up an object than they are willing to spend to acquire it. The existence of this effect has been documented in numerous exper- iments. We attempt to explain this effect by showing that evolution favors individuals whose preferences embody an endowment effect. The reason is that an endowment effect improves one`s bargaining position in bilateral trades. We show that for a general class of evolutionary processes strictly positive endowment effects will survive in the long run.
Subjects:endowment effect
evolution
bargaining
JEL:C79
C73
D00
Document Type:Working Paper
Appears in Collections:Bonn Econ Discussion Papers, Bonn Graduate School of Economics (BGSE), Universität Bonn

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