Book ChapterDOI
Experimental Tests of the Endowment Effect and the Coase Theorem
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In this paper, the Coase theorem predicts that about half the mugs will trade, but observed volume is always significantly less than the predicted volume, suggesting that transactions costs cannot explain the undertrading for consumption goods.Abstract:
Contrary to theoretical expectations, measures of willingness to accept greatly exceed measures of willingness to pay. This paper reports several experiments that demonstrate that this "endowment effect" persists even in market settings with opportunities to learn. Consumption objects (e.g., coffee mugs) are randomly given to half the subjects in an experiment. Markets for the mugs are then conducted. The Coase theorem predicts that about half the mugs will trade, but observed volume is always significantly less. When markets for "induced-value" tokens are conducted, the predicted volume is observed, suggesting that transactions costs cannot explain the undertrading for consumption goods.read more
Citations
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Journal ArticleDOI
Trading wine: On the endowment effect, loss aversion, and the comparability of consumer goods
TL;DR: In this article, the authors argue that the extent to which potential traders are susceptible to the endowment effect is related to the comparability of the to be traded goods, and they test this hypothesis in an experimental market in which participants endowed with a bottle of wine were offered the opportunity to trade their wine for another wine.
Journal ArticleDOI
Neoclassical finance, behavioral finance and noise traders: A review and assessment of the literature
TL;DR: In this article, the authors review the literature on the behavior of noise traders and analyze the consequences of their presence in the market, starting with a distinction between neoclassical finance and behavioral finance, and identify the market anomalies that provide evidence for the tendency of markets to trade at irrational levels.
Journal ArticleDOI
Saving behavior and cognitive abilities
TL;DR: In this article, the authors examine several potential sources of heterogeneity in dynamic decision making, including cognitive ability and personality scales, and conclude that the strongest predictors of both behavior and performance are two cognitive ability measures.
Journal ArticleDOI
Impact of reward and punishment motivation on behavior monitoring as indexed by the error-related negativity.
TL;DR: This study used a flanker task motivated by potential reward and potential punishment on different trials and also examined the N2 and P2 to the imperative stimulus, the response Pe, and the FRN and P3 to the outcome feedback to assess the impact of motivation valence on other stages of information processing in this choice reaction time task.
Book ChapterDOI
Changing Places: A Dual Judgment Model of Empathy Gaps in Emotional Perspective Taking
TL;DR: This article proposed a dual judgment model in which perspective takers first predict what their own reactions would be to different emotional situations, and then adjust these self-predictions to accommodate perceived differences between themselves and others.
References
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Book ChapterDOI
Prospect theory: an analysis of decision under risk
Daniel Kahneman,Amos Tversky +1 more
TL;DR: In this paper, the authors present a critique of expected utility theory as a descriptive model of decision making under risk, and develop an alternative model, called prospect theory, in which value is assigned to gains and losses rather than to final assets and in which probabilities are replaced by decision weights.
Journal ArticleDOI
Loss Aversion in Riskless Choice: A Reference-Dependent Model
Amos Tversky,Daniel Kahneman +1 more
TL;DR: In this article, the authors present a reference-dependent theory of consumer choice, which explains such effects by a deformation of indifference curves about the reference point, in which losses and disadvantages have greater impact on preferences than gains and advantages.
Journal ArticleDOI
Toward a positive theory of consumer choice
TL;DR: The economic theory of the consumer is a combination of positive and normative theories as discussed by the authors, which describes how consumers should choose, but it is also described how they do choose, and in certain well-defined situations many consumers act in a manner that is inconsistent with economic theory.
Posted Content
Fairness as a Constraint on Profit Seeking: Entitlements in the Market
TL;DR: In customer or labor markets, it is acceptable for a firm to raise prices (or cut wages) when profits are threatened, and to maintain prices when costs diminish as mentioned in this paper, and several market anomalies are explained by assuming that these standards of fairness influence the behavior of firms.
Journal ArticleDOI
De gustibus non est disputandum
George J. Stigler,Gary S. Becker +1 more
TL;DR: In this paper, the Notre collegue Christophe Longuet nous offre une traduction inedite de cet article canonique precedee d'une presentation, en tout point remarquable, vous sera certainement tres utile.