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
Eliciting Consumer WTP for Food Characteristics in a Developing Context: Application of Four Valuation Methods in an African Market
Roselyne Alphonce,Frode Alfnes +1 more
TL;DR: In this article, the authors identify four elicitation methods that can be conducted with one respondent at a time, and use them in a field setting: the Becker-DeGroot-Marschak mechanism, multiple price lists with stated quantities, and real-choice experiments.
Journal ArticleDOI
The anatomy of government failure
TL;DR: The Pareto standard as mentioned in this paper defines the institutions in which markets succeed or fail, and proposes an alternative approach for evaluating whether government fails: if an available PareTO improvement is not chosen or not implemented, that is a government failure.
Journal ArticleDOI
Behavioral Biases and Firm Behavior: Evidence from Kenyan Retail Shops
TL;DR: In this article, the authors show that acceptance of small risky gambles and scores on math tests is associated with inventory accumulation among Kenyan shopkeepers and argue that loss aversion may explain the broader puzzle of why high rates of return on capital among small firms in developing countries are not arbitraged away and do not lead to the high growth rates of consumption that the Euler equation will predict.
Journal ArticleDOI
Loss Aversion and Individual Characteristics
TL;DR: The authors investigated individual-level loss aversion with respect to travel time and money and found significant loss aversion in both dimensions, and found that subjects tend to be more loss averse when the reference is well established.
Journal ArticleDOI
Bounded Rationality in the Economics of Organization: Present Use and (Some) Future Possibilities
TL;DR: The authors argued that bounded rationality is neither necessary nor sufficient for producing the results of organizational economics. But it is possible to incorporate much richer notions of bounded rationality, founded on research in cognitive psychology, and illuminate the study of economic organization by means of such notions.
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.