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Sonderforschungsbereich 373: Quantification and Simulation of Economic Processes, Humboldt-Universität Berlin >
Discussion Papers, SFB 373, HU Berlin >
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| Title: | | Learning to like what you have: Explaining the endowment effect  |
| Authors: | | Huck, Steffen Kirchsteiger, Georg Oechssler, Jörg |
| Issue Date: | | 1997 |
| Series/Report no.: | | Discussion Papers, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes 1997,38 |
| 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 experiments. 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 almost all individuals will have a strictly positive and finite endowment effect. |
| JEL: | | C73 C79 D00 |
| Persistent Identifier of the first edition: | | urn:nbn:de:kobv:11-10064208 |
| Document Type: | | Working Paper |
| Appears in Collections: | | Discussion Papers, SFB 373, HU Berlin
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