Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/71256
Authors: 
Dupont, Dominique Y.
Lee, Gabriel S.
Year of Publication: 
2001
Series/Report no.: 
Reihe Ökonomie / Economics Series, Institut für Höhere Studien (IHS) 92
Abstract: 
The endowment effect, status quo bias, and loss aversion are robust and well documented results from experimental psychology. They introduce a wedge between the prices at which one is willing to sell or buy a good. The objective of this paper is to address this wedge. We show that the presence of asymmetric information in a rational-agent framework can account for the endowment effect, status quo bias and loss aversion as well as psychology-based explanations proposed in the past.
Subjects: 
endowment effect
status quo bias
loss aversion
asymmetric information
bid/ask spread
JEL: 
D81
D82
G22
Document Type: 
Working Paper

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