Book ChapterDOI
Experimental Tests of the Endowment Effect and the Coase Theorem
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TLDR
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
On the Emotional Value of Owning a Firm
TL;DR: In this article, the authors examine how owners of firms subjectively value their ownership stake in monetary terms and use possession attachment literature to investigate how emotional benefits and costs related to organizational ownership affect emotional value.
Posted Content
Examining Risk Preferences under High Monetary Incentives: Experimental Evidence from the People's Republic of China
TL;DR: This article conducted several experimental sessions to elicit certainty equivalents for a sequence of lotteries involving real monetary outcomes and found that even under extreme monetary incentives, subjects demanded amounts well in excess of expected value for low-probability gain prospects.
Journal ArticleDOI
A Test of the Theory of Reference-Dependent Preferences
TL;DR: In this article, eight alternative methods of eliciting preferences between money and a consumption good are identified: two of these are standard willingness-to-accept and willingness to pay measures, and the others differ with respect to the reference point used and the dimension in which responses are expressed.
Posted Content
Myopic Loss Aversion and the Equity Premium Puzzle
TL;DR: In this paper, a new explanation based on Kahneman and Tversky's "prospect theory" was proposed, which has two components: first, investors are assumed to be "loss averse" meaning they are distinctly more sensitive to losses than to gains, and second, investors were assumed to evaluate their portfolios frequently, even if they have long-term investment goals such as saving for retirement or managing a pension plan.
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Maps of Bounded Rationality
TL;DR: The work cited by the Nobel committee was done jointly with the late Amos Tversky (1937-1996) during a long and unusually close collaboration as mentioned in this paper, where they explored the psychology of intuitive beliefs and choices and examined their bounded rationality.
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.