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
Reference-dependent valuations of risk: Why willingness-to-accept exceeds willingness-to-pay
W. Kip Viscusi,Joel Huber +1 more
TL;DR: In this paper, the authors generalize models of reference dependence to identify separate reference dependence effects for increases and decreases in environmental health risk probabilities, for increases in costs, and reference dependence effect embodying the interaction of two changes.
Journal ArticleDOI
Consistency of risk premium measures
TL;DR: This paper used the results of a series of within-sample experiments to elicit risk premium measures from agricultural producers and found that there is little consistency between measures in different contexts and using different elicitation methods, suggesting that underlying risk preferences are not consistent.
Journal ArticleDOI
Tests of market outcomes with asymmetric valuations of gains and losses: Smaller gains, fewer trades, and less value
TL;DR: In this paper, the results of two sets of costless market simulations, using actual gain and loss valuations, show that actual gains from exchange and trade volumes are less than half of those expected with conventional assumptions, and that completion of all Pareto-efficient exchanges fail by wide margins to shift entitlements to those willing to pay the most for them.
Journal ArticleDOI
Heuristics, biases, and the regulation of risk
TL;DR: In this article, the authors describe key heuristics and biases and discuss their effects on policy outcomes in the area of risk regulation, and explore the utility of this interpretive framework through an examination of the origin, persistence, and repeal of the Delaney Clause in the United States.
Journal ArticleDOI
Rats value time differently on equivalent foraging and delay-discounting tasks.
Evan C. Carter,A. David Redish +1 more
TL;DR: A suite of intertemporal choice models were applied but it was found that a novel model incorporating interactions of decision-making systems to successfully explain behavior was needed.
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.