Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/66305 
Year of Publication: 
1997
Series/Report no.: 
SFB 373 Discussion Paper No. 1997,38
Publisher: 
Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes, Berlin
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: 
Document Type: 
Working Paper

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