Evolved To Like Our Stuff?

Robin Hanson (hanson@hss.caltech.edu)
Thu, 13 Feb 1997 14:21:50 -0800 (PST)

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Paper: ewp-game/9702001
URL: http://econwpa.wustl.edu/eprints/game/papers/9702/9702001.abs
From: oechsler@wiwi.hu-berlin.de (Joerg Oechssler)
Date: Thu, 06 Feb 1997 10:44:12 +0100

Title: Learning to Like What You Have - Explaining the Endowment Effect
Authors: Steffen Huck (Humboldt University, Berlin) and Georg Kirchsteiger
(University of Vienna) and Joerg Oechssler (Humboldt University, Berlin)
Contact: oechsler@wiwi.hu-berlin.de
JEL: C73
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.
\\ (ewp-game/9702001 , 0kb + 241kb + 268kb)