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Learning to Like What You Have - Explaining the Endowment Effect Author info | Abstract | Publisher info | Download info | Related research | Statistics Steffen Huck (Humboldt University, Berlin)
Georg Kirchsteiger (CentER, Tilburg)
Joerg Oechssler (Humboldt University, Berlin)
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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.
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Paper provided by EconWPA in its series Game Theory and Information with number
9702001.
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Date of creation: 06 Feb 1997Date of revision:
15 May 1997Handle: RePEc:wpa:wuwpga:9702001Contact details of provider: Web page: http://129.3.20.41
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Find related papers by JEL classification: C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
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