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What explains observed reluctance to trade? A comprehensive literature review

In: Research Handbook on Behavioral Law and Economics

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  • Kathryn Zeiler

Abstract

Valuation gaps and exchange asymmetries are among the most widely studied phenomena in the field of behavioral economics. This chapter presents the current state of the social science literature related to observed reluctance to trade. Numerous theories have been proposed and only a few might be safe to rule out based on the evidence to date. A number of theories have been developed and tested by both economists and psychologists including endowment theory, substitution theory, expectation theory, preference uncertainty, mere-ownership theory, enhancement theory, subject misconceptions, and regret avoidance. The chapter walks through each proposed theory, cataloging the evidence for and against. While some theories have garnered more support from the data than others, no single theory yet deserves the title of leading theory. As this chapter makes clear, much more work is required to develop a theory or set of theories worthy of designation as the leading theory.

Suggested Citation

  • Kathryn Zeiler, 2018. "What explains observed reluctance to trade? A comprehensive literature review," Chapters, in: Joshua C. Teitelbaum & Kathryn Zeiler (ed.), Research Handbook on Behavioral Law and Economics, chapter 13, pages 347-430, Edward Elgar Publishing.
    • Handle: RePEc:elg:eechap:14176_13
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    Cited by:

    1. Wettstein, Dominik J. & Boes, Stefan, 2022. "How value-based policy interventions influence price negotiations for new medicines: An experimental approach and initial evidence," Health Policy, Elsevier, vol. 126(2), pages 112-121.
    2. Kathryn Zeiler, 2019. "Mistaken about mistakes," European Journal of Law and Economics, Springer, vol. 48(1), pages 9-27, August.
    3. Zhang, Nan & Qin, Botao, 2021. "Do buyers and sellers evaluate air pollution reduction Differently? experimental evidence from China," Journal of Economic Psychology, Elsevier, vol. 87(C).
    4. Brebner, Sarah & Sonnemans, Joep, 2018. "Does the elicitation method impact the WTA/WTP disparity?," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 73(C), pages 40-45.

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    Keywords

    Economics and Finance; Law - Academic;

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