禀赋效应是主流经济学难以回避的“异象”（Anomalies），对主流经济学一系列重要的理论假设构成了严峻挑战。过去半个世纪以来，对于禀赋效应是否真实、有效和稳健的存在，在主流经济学家与行为经济学家和实验经济学家之间一直存在着严重的分歧与争论。近10年来，伴随着科学技术的进步以及脑科学、认知神经科学、尤其是神经经济学的发展，研究者们在行为实验的基础上，使用脑成像和脑刺激等先进技术，揭示了禀赋效应与人类大脑神经活动之间的相关关系和因果关系，在神经科学的层面上证实了禀赋效应存在的微观基础。文章将对这些研究成果进行较为全面的回顾与评述，从而为禀赋效应的存在性提供新的科学证据。

以禀赋效应理论为研究基础,通过两个情景实验对产品更换过程中买卖双方的决策心理进行了研究。实验1表明,在以旧换新活动中新产品的买方对旧产品的价格有高估的倾向,对新产品的价格有低估的倾向;相反,新产品的卖方对旧产品的价格有低估的倾向,而对于新产品的价格有高估的倾向,这说明产品更换决策中存在着双重的禀赋效应。实验2表明,新产品的买方对旧产品的属性评价显著高于新产品的卖方,对新产品的属性评价显著低于新产品的卖方,说明属性评价也存在禀赋效应的特征。双重禀赋效应的存在从消费者行为的角度解释了为什么消费者会出现创新抵制行为。

禀赋效应是指拥有某物品的人们对某物品的评价，比不拥有该物品品的人对该物品的评价要高得多。大量的行为实验研究表明，禀赋效应是人类行为的固有倾向，而非诱导的偏好。文章概述交换范式和估值范式这两种不同测度方式的禀赋效应早期实验研究，禀赋效应稳定性、普遍性和微观偏好基础的扩展实验研究，以及最新的关于禀赋效应究竟是源于被试误解还是客观事实的最新实验进展。在此基础上，文章展望了禀赋效应行为经济研究的未来方向。

Endowment effect refers to a phenomenon that people sometimes demand much more to give up an object of their own than they are, or would ever be, willing to pay to acquire the very same object. This phenomenon is universal in behavioral economics. This paper introduced the concepts and research paradigms of endowment effects, including the classical paradigm and barter trade paradigm, and elaborated two psychological mechanism of endowment effect, namely, loss aversion and query theory. Then the paper came to some influential factors of endowment effect, including motivation, emotions, object character, and study design characteristics. Finally, the issues deserved further research were also outlined, such as the origin and applied conditions of endowment effect.

农户普遍存在的禀赋效应,因土地人格化财产特征的强化,而成为抑制农地流转的重要根源。农地流转并不是一个纯粹的要素市场,而是包含了地缘、亲缘、人情关系在内的特殊市场,有其特殊的市场逻辑。推进农地的流转及其规模化经营,需要针对产权主体与产权客体不可分的交易约束,进行相应交易装置的选择与匹配。基于"产权强度-禀赋效应-交易装置"的分析线索,本文拓展了科斯定理。文章进一步对四川省崇州市的"农业共营制"进行了案例剖析。作者认为,以土地"集体所有、家庭承包、多元经营、管住用途"为主线的制度内核,将成为我国新型农业经营体系的基本架构。

研究目的:揭示农户利益损失的内在行为机理,为农地整治项目利益损失补偿机制的构建奠定理论基础。研究方法:运用禀赋效应理论提出农户利益损失内在行为机理的理论假说,并以湖北省部分县市340份农户问卷为样本,采用定序回归模型,分析农户对耕地被占用禀赋效应的影响因素。研究结果:农地整治过程中农户存在经济损失和主观损失,青苗压占、林木损毁、田块分割只存在经济损失,为补偿价值与市场价值的差值;房屋拆迁、坟墓迁移和耕地占用经济损失和主观损失并存,主观损失源于禀赋效应引起的农户主观价值和市场价值的认知差异。研究结论:不具有禀赋效应的物品发生损失时,应根据物品的市场价格进行补偿;具有禀赋效应的物品发生损失时,应根据禀赋效应的强弱对不同性质财产实行差别化的补偿策略,同时,也应避免过高的禀赋效应对要素的正常流动带来负面的影响,才能保护农户的利益,促进项目的顺利实施。

禀赋效应是指一旦某物品成为自己拥有的一部分,人们倾向给予它更高的价值评价。对于禀赋效应的解释主要是损失规避理论和自尊理论。影响禀赋效应产生的因素主要有物品价格的不确定性、好奇心效应、交易需求效应等。神经机制研究表明,内侧前额叶(MPFC)、伏隔核(NAcc)、岛叶(insula)等脑区与禀赋效应密切相关,神经机制研究为全面理解禀赋效应提供了新的途径。

The maximizers are more likely to pursue optimal solutions, while the satisficers prefer to seek satisfied ones. Based on Rational Choice Theory and The Bounded Rationality Model, the previous studies proposed the maximizing and satisficing styles and thus compared the two groups of decision-makers on their decision-making features and psychological indexes. With regards to pure economic effectiveness, subjective psychological meanings and practical decision-making choices, the question of ‘which one is better between these two decision-making styles’ differs on individuals and decision-making targets. The future studies could focus on improving measuring tools basing on a clear distinction of those two decision-making styles. And then the domain specificity, the relationship between the two styles and the positive emotions and the origin of psychological paradox could be further explored.

Recent research on the endowment effect (a gap between selling and buying prices for the same good) considers as a working hypothesis that an endowed good becomes part of the self. Consequently, the endowment effect is viewed as a self-enhancement strategy originating or following from this self-object link. Within this perspective, subsequent self-threat typically enhances the endowment effect, whereas self-affirmation eliminates the endowment effect. Contrasting these findings and drawing on the idea that initial self-evaluations constrain the value of a newly acquired object, we reasoned that failures (successes) of the self experienced before the endowment will lower (raise) the value of possessions and influence the endowment effect accordingly. In Studies 1 and 2, we show that a private self-threat (vs. no threat) induced before endowing (vs. presenting) participants with a good eliminates the endowment effect. In Study 3, we show that feelings of pride (vs. no pride) induced via proprioceptive feedback yields a reliable endowment effect. These findings suggest that initial self-success/failure moderate the endowment effect and further show that bodily cues influence property transaction.

The endowment effect, the tendency to value possessions more than non-possessions, is a well known departure from rational choice and has been replicated in numerous settings. We investigate the universality of the endowment effect, its evolutionary significance, and its dependence on environmental factors. We experimentally test for the endowment effect in an isolated and evolutionarily relevant population of hunter-gatherers, the Hadza Bushmen of Northern Tanzania. We find that Hadza living in isolated regions do not display the endowment effect, while Hadza living in a geographic region with increased exposure to modern society and markets do display the endowment effect.

The autobiographical-self refers to a mental state derived from the retrieval and assembly of memories regarding one’s biography. The process of retrieval and assembly, which can focus on biographical facts or personality traits or some combination thereof, is likely to vary according to the domain chosen for an experiment. To date, the investigation of the neural basis of this process has largely focused on the domain of personality traits using paradigms that contrasted the evaluation of one’s traits (self-traits) with those of another person’s (other-traits). This has led to the suggestion that cortical midline structures (CMSs) are specifically related to self states. Here, with the goal of testing this suggestion, we conducted activation-likelihood estimation (ALE) meta-analyses based on data from 28 neuroimaging studies. The ALE results show that both self-traits and other-traits engage CMSs; however, the engagement of medial prefrontal cortex is greater for self-traits than for other-traits, while the posteromedial cortex is more engaged for other-traits than for self-traits. These findings suggest that the involvement CMSs is not specific to the evaluation of one’s own traits, but also occurs during the evaluation of another person’s traits.

The endowment effect has been debated for over 30 years. Recent research suggests that differential focus of attention might play a role in shaping preferences. In two studies we investigated the role of biased attention in the emergence of endowment effects. We thereby derive predictions from an extended version of evidence accumulation models by additionally assuming a bias in attentional allocation based on ones endowment status. We test these predictions against an alternative account in which the endowment effect is the result of initial anchoring and adjustment differences (Sequential Value Matching model; Johnson and Busemeyer, 2005). In both studies we add deliberation time constraints to a standard Willingness-to-Accept/Willingness-to-Pay paradigm and consistently find that the endowment effect grows as deliberation time increases. In Study 2 we additionally use eye tracking and find that buyers focus more on value decreasing attributes than sellers (and vice versa for value increasing attributes). This shift in attention plays a pivotal role in the construction of value and partially mediates the endowment effect.

Cason and Plott (J Polit Econ, 122(6):1235–1270, 2014) show that subjects’ misconception about the incentive properties of the Becker-DeGroot-Marschak (BDM) value elicitation procedure can generate...

Abstract Assumes that ownership of an object causes the owner to treat the object as a social entity because ownership creates a psychological association between the object and the owner. Three experiments investigated whether Ss would evaluate an object more favorably merely because they owned it, a bias analogous to other self-serving biases people display. Study 1 confirmed the existence of this mere ownership effect. Study 2 showed that the effect was not due to Ss having greater exposure to an owned object relative to an unowned object. Study 3 showed that the effect may be a specific instance of a general tendency of people to make self-enchancing judgments. (PsycINFO Database Record (c) 2012 APA, all rights reserved)

As mouse-driven desktop computers give way to touchpad laptops and touchscreen tablets, the role of touch in online consumer behavior has become increasingly important. This work presents initial explorations into the effects of varying touch-based interfaces on consumers, and argues that research into the interfaces used to access content can be as important as research into the content itself. Two laboratory studies using a variety of touch technologies explore how touchscreen interfaces can increase perceived psychological ownership, and this in turn magnifies the endowment effect. Touch interfaces also interact with importance of product haptics and actual interface ownership in their effects on perceived product ownership, with stronger effects for products high in haptic importance and interfaces that are owned. Results highlight that perceptions of online products and marketing activities are filtered through the lens of the interfaces used to explore them, and touch-based devices like tablets can lead to higher product valuations when compared to traditional computers.

The effect of reference price on brand choice decisions has been well documented in the literature. Researchers, however, have differed in their conceptualizations and, therefore, in their modeling of reference price. In this article, we evaluate five alternative models of reference price of which two arestimulus based(i.e., based on information available at the point‐of‐purchase) and three that arememory based(i.e., based on price history and/or other contextual factors). We calibrate the models using scanner panel data for peanut butter, liquid detergent, ground coffee, and tissue. To account for heterogeneity in model parameters, we employ a latent class approach and select the best segmentation scheme for each model. The best model of reference price is then selected on the basis of fit and prediction, as well as on the basis of parsimony in cases where the fits of the models are not very different. In all four categories, we find that the best reference price model is a memory‐based model, namely, one that is based on the brand's own price history. In the liquid detergent category, however, we find that one of the stimulus‐based models, namely, the current price of a previously chosen brand, also performs fairly well. We discuss the implications of these findings.

To learn why WTA regularly exceeds WTP in economic experiments involving inexpensive market goods with ample substitutes, the verbal protocol technique was used in a real cash experiment employing a random price auction. Results suggest that the primary reason for the disparity was subjects鈥 reluctance to suffer a net loss from any transaction, whether purchase or sale, and tendency to consider sale much below assumed market price as a loss. This interpretation indicates a kind of loss aversion, but not the kind envisioned in the endowment effect, which maintains that selling creates a loss and buying creates a gain.

This note emphasizes the special role of prospect theory in drawing psychophysical considerations into theories of decision making with respect to risk. An example of such a consideration is the dependence of outcome value on a reference point and the increased sensitivity of loss relative to gain (i.e., loss aversion). Loss aversion can explain the St. Petersburg paradox without requiring concave utility, it has the correct psychological foundation, it is theoretically useful, and it is a parsimonious principle that can explain many puzzles. A few open questions are whether loss aversion is a stable feature of preference, whether it is an expression of fear, and what are its properties.

Behavioral economics has demonstrated systematic decision‐making biases in both lab and field data. Do these biases extend across contexts, cultures, or even species? We investigate this question by introducing fiat currency and trade to a colony of capuchin monkeys and recovering their preferences over a range of goods and gambles. We show that capuchins react rationally to both price and wealth shocks but display several hallmark biases when faced with gambles, including reference dependence and loss aversion. Given our capuchins’ inexperience with money and trade, these results suggest that loss aversion extends beyond humans and may be innate rather than learned.

A key focus of current research in neuroeconomics concerns how the human brain computes value. Although, value has generally been viewed as an absolute measure (e.g., expected value, reward magnitude), much evidence suggests that value is more often computed with respect to a changing reference point, rather than in isolation. Here, we present the results of a study aimed to dissociate brain regions involved in reference-independent (i.e., "absolute") value computations, from those involved in value computations relative to a reference point. During functional magnetic resonance imaging, subjects acted as buyers and sellers during a market exchange of lottery tickets. At a behavioral level, we demonstrate that subjects systematically accorded a higher value to objects they owned relative to those they did not, an effect that results from a shift in reference point (i.e., status quo bias or endowment effect). Our results show that activity in orbitofrontal cortex and dorsal striatum track parameters such as the expected value of lottery tickets indicating the computation of reference-independent value. In contrast, activity in ventral striatum indexed the degree to which stated prices, at a within-subjects and between-subjects level, were distorted with respect to a reference point. The findings speak to the neurobiological underpinnings of reference dependency during real market value computations.

Psychological and behavioral economic theories have shown that people often make irrational and suboptimal decisions. To describe certain decisions, people often use words related to pain ("hurt," "painful"). Neuroscientific evidence suggests common overlap between systems involved in physical pain and decision-making. Yet no prior studies have explored whether a pharmacological intervention aimed at reducing physical pain could reduce the pain of decision-making. The current investigation filled this gap by assigning participants to consume the physical painkiller acetaminophen or placebo and then exposing them to situations known to produce cognitive dissonance (Experiment 1) or loss aversion (Experiment 2). Both experiments showed that acetaminophen reduced the pain of decision-making, as indicated by lower attitude change that accompanies cognitive dissonance and lower selling prices when selling personal possessions. (C) 2014 Elsevier Inc. All rights reserved.

Reports of endowment effects in nonhuman primates have received considerable attention in the comparative literature in recent years. However, little is known about the mechanisms underlying these effects. Continuing to explore endowment effects across different species of primate may reveal subtle differences in behavior that can help formulate specific hypotheses about the relevant mechanisms and the social and ecological factors that have shaped them. In this study, we use a paradigm that has previously been used to test chimpanzees (Pan troglodytes) and orangutans (Pongo spp.) to explore whether western lowland gorillas (Gorilla gorilla) exhibit comparable endowment effects. We find that gorillas exhibit endowment effects when in possession of food, but not nonfood, items, and that they show a statistically stronger effect than chimpanzees but not orangutans. These findings are consistent with the hypothesis that mechanisms for endowment effects in primates may be related to inhibitory control or risk aversion.

Simple exchange experiments have revealed that participants trade their endowment less frequently than standard demand theory would predict. List (2003a) found that the most experienced dealers acting in a well functioning market are not subject to this exchange asymmetry, suggesting that a significant amount of market experience is required to overcome it. To understand this market-experience effect, we introduce a distinction between two types of uncertainty090000choice uncertainty and trade uncertainty090000both of which could lead to exchange asymmetry. We conjecture that trade uncertainty is most important for exchange asymmetry. To test this conjecture, we design an experiment where the two treatments impact differently on trade uncertainty, while controlling for choice uncertainty. Supporting our conjecture, we find that 090008forcing090009 subjects to give away their endowment in a series of exchanges eliminates exchange asymmetry in a subsequent test. We discuss why markets might not provide sufficient incentives for learning to overcome exchange asymmetry.

While evidence suggests that people evaluate outcomes with respect to reference points, little is known about what determines them. We conduct two experiments that show that reference points are determined, at least in part, by expectations. In an exchange experiment, we endow subjects with an item and randomize the probability they will be allowed to trade. Subjects that are less likely to be able to trade are more likely to choose to keep their item. In a valuation experiment, we randomly assign subjects a high or low probability of obtaining an item and elicit their willingness-to-accept for it. The high probability treatment increases valuation of the item by 20--30%. Copyright 2011, Oxford University Press.

The well-known willingness to pay–willingness to accept (WTP–WTA) gap refers to the observation that individuals attach a higher value to objects they own (WTA) than to objects they do not own (WTP). We report on experiments to re-investigate the possibility that the WTP–WTA gap arises from subject misconceptions due to experimental procedures as suggested by Plott and Zeiler (2005). The contribution of this paper is two-fold: first, we attempt to replicate the findings by Plott and Zeiler that the WTP–WTA gap disappears when using procedures that are aimed at reducing misconceptions, such as extensive training and practice rounds for the BDM mechanism. However, we fail to do so as the WTP–WTA gap persists in the main task where subjects state their WTA or WTP for a mug. Second, we use the paid practice rounds to identify subjects without apparent misconceptions and find that also for those subjects who never make dominated choices in the lottery tasks, the WTP–WTA gap in the mug task exists. Thus, we find no evidence of the idea that subject misconceptions are the main source of the WTP–WTA gap.

People typically demand more to part with goods they own than they would be willing to pay to acquire identical goods they do not own, a phenomenon known as the endowment effect [1–3]. Recently, a large body of behavioral research has suggested that the endowment effect may actually be a type of self-referent cognitive bias resulting from ownership of an object. However, the neural underpinnings of this effect are not well understood. In the present study, we used functional magnetic resonance imaging (fMRI) to explore whether brain activity can predict the extensibility of the endowment effect to items owned by another individual with a close relationship to the subject. Subjects were asked to decide whether to buy or sell their own or their mothers’ possessions at various prices. Behavioral results showed an endowment effect not only for goods owned by the subjects, but also for goods owned by the subjects’ mothers, providing evidence for the extensibility of the endowment effect. Neuroimaging data showed activation in the medial prefrontal cortex (MPFC) and insula in both ownership conditions. Also, MPFC activation was positively correlated with the behavioral indifference point in the sell-for-self and sell-for-mother conditions. Furthermore, psychophysiological interaction (PPI) analysis revealed that MPFC activation was accompanied by increased functional integration with insula and striatum. Together, these findings suggest that MPFC may play an important role in the extensibility of the endowment effect.

Recent studies have demonstrated that the ownership of a product leads to a biased perception of its aspects. Based on research on embodied cognition, we argue that the physical action of hand washing can reset the cognitive system to a more neutral state by reducing the asymmetrical perception of owned and not owned products. In three studies, we examined the effects of hand washing on the endowment effect by asking owners of a product to exchange it for a similar one. As expected, in Experiment 1, we showed that hand washing doubled the percentage of participants who exchanged an owned product for an alternative product. In Experiment 2, we replicated this finding and showed that only the action of hand washing and not a prime of physical cleaning elicited this effect. In Experiment 3, we again replicated the hand washing effect on exchange rates and examined the effect of hand washing on product evaluations. The results of all experiments suggest that hand washing reduces decision preferences that are biased by ownership.

We find that large increases in age do not reduce the endowment effect, supporting the hypothesis that people have reference-dependent preferences which are not changed by repeated experience getting and giving up goods.

Abstract: How do social observers perceive and judge individuals who self-enhance (vs. not)? Using a decision-theoretic framework, we distinguish between self-enhancement bias and error, where the former comprises both correct and incorrect self-perceptions of being better than average. The latter occurs when a claim to be better than others is found to be false. In two studies, we find that when judging people's competence, observers are sensitive to the accuracy of self-perception. When judging their morality, however, they tend to respond negatively to any claims of being better than average. These findings are further modulated by the domain of performance (intelligence vs. moral aptitude). Implications for the strategic use of self-enhancement claims are discussed.

When an object comes into possession, the owner will typically think that it is worth more than it did before they owned the item in a bias known as the endowment effect. This bias is particularly robust in Western societies with independent self-construals, but has not been observed in children below 5–6years of age. In three studies, we investigated whether endowment effect can be induced in younger children by focusing their attention on themselves. 120 children aged 3–4years evaluated toys before and after a task where they made pictures of themselves, a friend or a neutral farm scene. Over the three studies, children consistently evaluated their own possessions, relative to other identical toys, more positively following the self-priming manipulation. Together these studies support the notion that possessions can form part of an “extended self” from early on in development and that the endowment effect may be due to an attentional self-bias framing.

Growing evidence suggests that people overvalue their own objects compared to those owned by others, even when the two objects are virtually identical (i.e., ownership effect). Most researchers seem to consider self-enhancement as the underlying mechanism while neglecting the possible process of other-derogation. Here, we attempted to compare these two perspectives, adopting both implicit and neurocognitive methodologies to overcome social desirability confounds. In Study 1, we found that the ownership effect (measured by Implicit Association Test), was correlated with other-derogation but not with self-enhancement (both measured by the Go/No-Go Association Task). In Study 2, by using the event-related potentials (ERPs) technique, we showed that positive-framed other-owned objects elicited significant evaluative incongruity (i.e. indexed by late positive potentials) compared to negative-framed other-owned objects. In contrast, negative-framed self-owned objects did not evoke significant evaluative incongruity relative to positive-framed self-owned objects. Our research suggests that, in addition to the self-enhancement that has been widely demonstrated, it is also important to keep other-derogation in mind when examining the ownership effect.

http://www.jstor.org/stable/3590453

Several experimental studies have reported that an otherwise robust regularity-the disparity between Willingness-To-Accept and Willingness-To-Pay-tends to be greatly reduced in repeated markets, posing a serious challenge to existing reference- dependent and reference- independent models alike. This article offers a new account of the evidence, based on the assumptions that individuals are affected by good and bad deals relative to the expected transaction price ( price sensitivity), with bad deals having a larger impact on their utility ( `bad-deal' aversion). These features of preferences explain the existing evidence better than alternative approaches, including the most recent developments of loss aversion models.

Abstract How do people judge the monetary value of objects? One clue is provided by the typical endowment study (D. Kahneman, J. L. Knetsch, & R. H. Thaler, 1991), in which participants are randomly given either a good, such as a coffee mug, that they may later sell ("sellers") or a choice between the good and amounts of cash ("choosers"). Sellers typically demand at least twice as much as choosers, inconsistent with economic theory. This result is usually explained by an increased weighting of losses, or loss aversion. The authors provide a memory-based account of endowment, suggesting that people construct values by posing a series of queries whose order differs for sellers and choosers. Because of output interference, these queries retrieve different aspects of the object and the medium of exchange, producing different valuations. The authors show that the content and structure of the recalled aspects differ for selling and choosing and that these aspects predict valuations. Merely altering the order in which queries are posed can eliminate the endowment effect, and changing the order of queries can produce endowment-like effects without ownership.

Sensory judgments improve with practice. Such perceptual learning is often thought to reflect an increase in perceptual sensitivity. However, it may also represent a decrease in response bias, with unpracticed observers acting in part on a priori hunches rather than sensory evidence. To examine whether this is the case, 55 observers practiced making a basic auditory judgment (yes/no amplitude-modulation detection or forced-choice frequency/amplitude discrimination) over multiple days. With all tasks, bias was present initially, but decreased with practice. Notably, this was the case even on supposedly ias-free, 2-alternative forced-choice, tasks. In those tasks, observers did not favor the same response throughout (stationary bias), but did favor whichever response had been correct on previous trials (nonstationary bias). Means of correcting for bias are described. When applied, these showed that at least 13% of perceptual learning on a forced-choice task was due to reduction in bias. In other situations, changes in bias were shown to obscure the true extent of learning, with changes in estimated sensitivity increasing once bias was corrected for. The possible causes of bias and the implications for our understanding of perceptual learning are discussed.

Early studies of intuitive judgment and decision making conducted with the late Amos Tversky are reviewed in the context of two related concepts: an analysis of accessibility, the ease with which thoughts come to mind; a distinction between effortless intuition and deliberate reasoning. Intuitive thoughts, like percepts, are highly accessible. Determinants and consequences of accessibility help explain the central results of prospect theory, framing effects, the heuristic process of attribute substitution, and the characteristic biases that result from the substitution of nonextensional for extensional attributes. Variations in the accessibility of rules explain the occasional corrections of intuitive judgments. The study of biases is compatible with a view of intuitive thinking and decision making as generally skilled and successful.

No abstract is available for this item.

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.

The function of the mesial prefrontal cortex (MPFC: including Brodman areas 10/12/32) remains an enigma. Current theories suggest a role in representing internal information, including emotional introspection, autonomic control, and a "default state" of semantic processing. Recent evidence also suggests that parts of this region may also play a role in processing reward outcomes. In this study, we investigated the possibility that a region of the MPFC would be preferentially recruited by monetary reward outcomes using a parametric monetary incentive delay (MID) task. Twelve healthy volunteers participated in functional magnetic resonance scans while playing the MID task. Group analyses indicated that while the ventral striatum was recruited by anticipation of monetary reward, a region of the MPFC instead responded to rewarding monetary outcomes. Specifically, volume-of-interest analyses indicated that when volunteers received dollar sign5.00 after anticipating a dollar sign5.00 win, MPFC activity increased, whereas when volunteers did not receive dollar sign5.00 after anticipating a dollar sign5.00 win, MPFC activity decreased, relative to outcomes with no incentive value. These findings suggest that in the context of processing monetary rewards, a region of the MPFC preferentially tracks rewarding outcomes.

The “endowment effect” refers to the tendency to place greater value on items that one owns—an anomaly that violates the reference-independence assumption of rational choice theories. We investigated neural antecedents of the endowment effect in an event-related functional magnetic resonance imaging (fMRI) study. During scanning, 24 subjects considered six products paired with 18 different prices under buying, choosing, or selling conditions. Subjects showed greater nucleus accumbens (NAcc) activation for preferred products across buy and sell conditions combined, but greater mesial prefrontal cortex (MPFC) activation in response to low prices when buying versus selling. During selling, right insular activation for preferred products predicted individual differences in susceptibility to the endowment effect. These findings are consistent with a reference-dependent account in which ownership increases value by enhancing the salience of the possible loss of preferred products.

Most legal scholarship implicitly adopts the assumption of the Coase Theorem that the value an individual places on a legal entitlement is independent of whethe

We develop a model of reference-dependent preferences and loss aversion where "gain-loss utility" is derived from standard "consumption utility" and the reference point is determined endogenously by the economic environment. We assume that a person's reference point is her rational expectations held in the recent past about outcomes, which are determined in a personal equilibrium by the requirement that they must be consistent with optimal behavior given expectations. In deterministic environments, choices maximize consumption utility, but gain-loss utility influences behavior when there is uncertainty. Applying the model to consumer behavior, we show that willingness to pay for a good is increasing in the expected probability of purchase and in the expected prices conditional on purchase. In within-day labor-supply decisions, a worker is less likely to continue work if income earned thus far is unexpectedly high, but more likely to show up as well as continue work if expected income is high.

In humans, the capacity for economically rational choice is constrained by a variety of preference biases: humans evaluate gambles relative to arbitrary reference points; weigh losses heavier than equally sized gains; and demand a higher price for owned goods than for equally preferred goods that are not yet owned. To date, however, fewer studies have examined the origins of these biases. Here, we review previous work demonstrating that human economic biases such as loss aversion and reference dependence are shared with an ancestrally related New World primate, the capuchin monkey (Cebus apella). We then examine whether capuchins display an endowment effect in a token-trading task. We identified pairs of treats (fruit discs versus cereal chunks) that were equally preferred by each monkey. When given a chance to trade away their owned fruit discs to obtain the equally valued cereal chunks (or vice versa), however, monkeys required a far greater compensation than the equally preferred treat. We show that these effects are not due to transaction costs or timing issues. These data suggest that biased preferences rely on cognitive systems that are more evolutionarily ancient than previously thought--and that common evolutionary ancestry shared by humans and capuchins may account for the occurrence of the endowment effect in both species.

This paper argues that the endowment effect – the tendency for minimum selling price to exceed maximum buying price for a particular object – might be minimized when a negative emotion is induced. The findings from two experiments on 400 participants support this hypothesis: the endowment effect only occurs when participants are induced to feel happy, and is absent when people are induced to feel sadness. Thus, the importance of emotional states is highlighted.

The purpose of the present research was to explore the role of social value orientation in the endowment effect. The study gathered 190 participants from university students in Taiwan: 74 of these were classified as individualists, 44 as competitors and 56 as prosocials, with 16 being unclassified. Results from an experimental study indicated that the individualists' and competitors' average selling prices were significantly higher than the average buying prices for a commodity; thus the endowment effect was observed in these two orientations. The endowment effect was not observed in those having a prosocial orientation, however.

This study examines individual behavior in two well-functioning marketplaces to investigate whether market experience eliminates the endowment effect. Field evidence from both markets suggests that individual behavior converges to the neoclassical prediction as market experience increases. In an experimental test of whether these observations are due to treatment (market experience) or selection (e.g., static preferences), I find that market experience plays a significant role in eliminating the endowment effect. I also find that these results are robust to institutional change and extend beyond the two marketplaces studied. Overall, this study provides strong evidence that market experience eliminates an important market anomaly.

The endowment effect is the tendency for people who own a good to value it more than people who do not. Its economic impact is consequential. It creates market inefficiencies and irregularities in valuation such as differences between buyers and sellers, reluctance to trade, and mere ownership effects. Traditionally, the endowment effect has been attributed to loss aversion causing sellers of a good to value it more than buyers. New theories and findings – some inconsistent with loss aversion – suggest evolutionary, strategic, and more basic cognitive origins. In an integrative review, we propose that all three major instantiations of the endowment effect are attributable to exogenously and endogenously induced cognitive frames that bias which information is accessible during valuation.

People typically demand more to relinquish the goods they own than they would be willing to pay to acquire those goods if they did not already own them (the endowment effect). The standard economic explanation of this phenomenon is that people expect the pain of relinquishing a good to be greater than the pleasure of acquiring it (the loss aversion account). The standard psychological explanation is that people are reluctant to relinquish the goods they own simply because they associate those goods with themselves and not because they expect relinquishing them to be especially painful (the ownership account). Because sellers are usually owners, loss aversion and ownership have been confounded in previous studies of the endowment effect. In two experiments that deconfounded them, ownership produced an endowment effect but loss aversion did not. In Experiment 1, buyers were willing to pay just as much for a coffee mug as sellers demanded if the buyers already happened to own an identical mug. In Experiment 2, buyers brokers and sellers brokers agreed on the price of a mug, but both brokers traded at higher prices when they happened to own mugs that were identical to the ones they were trading. In short, the endowment effect disappeared when buyers were owners and when sellers were not, suggesting that ownership and not loss aversion causes the endowment effect in the standard experimental paradigm.

People often attach a higher value to an object when they own it (i.e., as seller) compared with when they do not own it (i.e., as buyer) phenomenon known as the endowment effect. According to recentcognitive process accounts of the endowment effect, the effect is due to differences between sellers and buyers in information search. Whereas previous investigations have focused on search order and internalsearch processes (i.e., in memory), we used a sampling paradigm to examine differences in search termination in external search. We asked participants to indicate selling and buying prices for monetarylotteries in a within-subject design. In an experience condition, participants had to learn about the possible outcomes and probabilities of the lotteries by experiential sampling. As hypothesized, sellers tended to terminate search after sampling high outcomes, whereas buyers tended to terminate search after sampling low outcomes. These differences in stopping behavior translated into samples of the lotteries that were differentially distorted for sellers and buyers; the amount of the distortion was predictive of the resulting size of the endowment effect. In addition, for sellers search was more extended when high outcomes were rare compared with when low outcomes were rare. Our results add to the increasing evidence that the endowment effect is due, in part, to differences in predecisional information search.

Abstract People often indicate a higher price for an object when they own it (i.e., as sellers) than when they do not (i.e., as buyers)-a phenomenon known as the endowment effect. We develop a cognitive modeling approach to formalize, disentangle, and compare alternative psychological accounts (e.g., loss aversion, loss attention, strategic misrepresentation) of such buyer-seller differences in pricing decisions of monetary lotteries. To also be able to test possible buyer-seller differences in memory and learning, we study pricing decisions from experience, obtained with the sampling paradigm, where people learn about a lottery's payoff distribution from sequential sampling. We first formalize different accounts as models within three computational frameworks (reinforcement learning, instance-based learning theory, and cumulative prospect theory), and then fit the models to empirical selling and buying prices. In Study 1 (a reanalysis of published data with hypothetical decisions), models assuming buyer-seller differences in response bias (implementing a strategic-misrepresentation account) performed best; models assuming buyer-seller differences in choice sensitivity or memory (implementing a loss-attention account) generally fared worst. In a new experiment involving incentivized decisions (Study 2), models assuming buyer-seller differences in both outcome sensitivity (as proposed by a loss-aversion account) and response bias performed best. In both Study 1 and 2, the models implemented in cumulative prospect theory performed best. Model recovery studies validated our cognitive modeling approach, showing that the models can be distinguished rather well. In summary, our analysis supports a loss-aversion account of the endowment effect, but also reveals a substantial contribution of simple response bias.

This research examines the influence of touch on impulse-purchasing behavior. We first replicate the Rook and Fisher [Rook DW, Fisher RJ. Normative influences on impulsive buying behavior. J Consum Res 1995;22:305 13.] studies about the moderating effect of the normative evaluation of impulse purchase on impulse-purchasing behavior. Extending the impulse-purchasing literature, we examine individual differences in touch and how they affect impulsive-buying behavior. Results from a field experiment suggest that both individual and environmental touch-related factors increase impulse purchasing.

Research in judgment and decision making generally ignores the distinction between factual and subjective feelings of ownership, tacitly assuming that the two correspond closely. The present research suggests that this assumption might be usefully reexamined. In two experiments on the endowment effect we examine the role of subjective ownership by independently manipulating factual ownership (i.e., what participants were told about ownership) and physical possession of an object. This allowed us to disentangle the effects of these two factors, which are typically confounded. We found a significant effect of possession, but not of factual ownership, on monetary valuation of the object. Moreover, this effect was mediated by participants feelings of ownership, which were enhanced by the physical possession of the object. Thus, the endowment effect did not rely on factual ownership per se but was the result of subjective feelings of ownership induced by possession of the object. It is these feelings of ownership that appeared to lead individuals to include the object into their endowment and to shift their reference point accordingly. Potential implications and directions for future research are discussed.

The nascent field of neuroeconomics seeks to ground economic decision-making in the biological substrate of the brain. We used functional magnetic resonance imaging of Ultimatum Game players to investigate neural substrates of cognitive and emotional processes involved in economic decision-making. In this game, two players split a sum of money; one player proposes a division and the other can accept or reject this. We scanned players as they responded to fair and unfair proposals. Unfair offers elicited activity in brain areas related to both emotion (anterior insula) and cognition (dorsolateral prefrontal cortex). Further, significantly heightened activity in anterior insula for rejected unfair offers suggests an important role for emotions in decision-making.

In three experiments we show that the endowment effect---the tendency to demand more money for relinquishing owned goods than one is willing to pay for the same goods---fails to emerge when sellers are not fully depleted of their endowment. This finding is incompatible with prospect theory's account of the effect as stemming primarily from aversion to loss relative to the individual's current state. We suggest a new account of the endowment effect as reflecting the human aversion to “giving it all up” rather than simply an aversion to incurring any loss relative to the status quo. Experiments 1 and 2 show the effect employing a pricing paradigm. Experiment 3 examines what constitutes “all” in the giving-it-all-up effect. This paper was accepted by Uri Gneezy, behavioral economics.

This paper tests the conjecture that the divergence of willingness to pay (WTP) and willingness to accept (WTA) for identical goods is driven by the degree of substitution between goods. In contrast to well-known results for market goods with close substitutes (i.e., candy bars and coffee mugs), our results indicate a convergence of WTP and WTA measures of value. However, for a nonmarket good with imperfect substitutes (i.e., reduced health risk), the divergence of WTP and WTA value measures is persistent, even with repeated market participation and full information on the nature of the good.

This research proposes that the concept of emotional attachment, and specifically the independent constructs of psychological ownership and affective reaction, can help explain many of the endowment effect findings documented in the literature. We define these constructs and then test them across a set of nine studies in which we both replicate previous and generate new endowment effect findings, and then show that psychological ownership and affective reaction can mediate the effects. In doing so, we offer direct empirical support for the idea of emotional attachment as a driver of loss aversion while also providing practitioners and future endowment effect researchers with new insights about the psychological processes that underlie the endowment effect.

Sun, Y.-C. (2011). The impact of locus of control and priming on the endowment effect. Scandinavian Journal of Psychology 52, 420 426.This paper demonstrates the effects of different priming conditions on the endowment effect with respect to seller and buyer roles for individuals with different loci of control. Individuals with an external locus of control process information less rationally, and they are more susceptible to external influences. In addition, the literature reports that when individuals are making a purchasing decision, they tend to perceive the value of the product as being higher because of its utility aspect because decision makers search for reasons and arguments to justify their choices (Shafir 1993; Tversky & Griffin, 1991). Therefore, this study investigates the effects of different priming conditions (utilitarian priming vs. hedonic priming) on the endowment effect according to each type of locus of control (internal vs. external). The results showed that the endowment effect was larger when externals were exposed to utilitarian priming as opposed to hedonic priming. Finally, the implications of these findings and suggestions for future research are discussed.

All too frequently, people fail to take actions that are in their best interest (e.g., not taking necessary medications). Researchers have attempted to explain such behaviors by identifying subtle motivational forces that foster an avoidance of attractive outcomes. However, in many cases, such motivational forces have been difficult to identify. We propose that failures such as these to act in valued ways are in some cases caused by insufficient levels of orienting attention. To test this hypothesis, we first created a laboratory analog of real-world failures to act in valued ways, 1 in which participants persisted in viewing lower-valenced images even though they could have, at no cost, viewed a higher-valenced image. When we experimentally increased their orienting attention toward a caption stating they had the option to switch, participants more frequently elected to view the higher valenced image (Studies 1a-c). In real-world behavioral contexts, increasing attention, without an apparent change in valuation, also led to increased levels of approach motivation in behavioral contexts involving purchasing apples (Study 2) and electing to take the stairs instead of the escalator (Studies 3a-c). In light of these findings, we consider the role of orienting attention in motivated behavior.

We present a new experimental design to test whether the endowment effect exists for exchange goods, like money. We compare three groups to a baseline: one endowed with money, one endowed with chocolate coins, and one endowed with chocolate coins described as “tokens.” We find an endowment effect for chocolate coins, but no endowment effect for money or for chocolate coins when they are described as tokens. The results suggest that the endowment effect does not exist for exchange goods.

The economic theory of the consumer is a combination of positive and normative theories. Since it is based on a rational maximizing model it describes how consumers should choose, but it is alleged to also describe how they do choose. This paper argues that in certain well-defined situations many consumers act in a manner that is inconsistent with economic theory. In these situations economic theory will make systematic errors in predicting behavior. Kanneman and Tversey's prospect theory is proposed as the basis for an alternative descriptive theory. Topics discussed are: undeweighting of opportunity costs, failure to ignore sunk costs, scarch behavior choosing not to choose and regret, and precommitment and self-control.

This study reports a new meta-analysis of papers that elicit willingness-to-pay (WTP) and willingness-to-accept compensation (WTA) measures of value for the same good. We investigate the effects of type of good and several survey-design features on the WTP/WTA disparity, measured as the logarithm of the ratio of mean WTA to mean WTP. Confirming Horowitz and McConnell s (2002) pioneering meta-analysis, we find the disparity is smaller for ordinary private goods than for public and non-market goods, that it is not solely an artifact of using hypothetical transactions or other weak experimental or survey methods, and that it is smaller for studies using student subjects. In addition, we find that the disparity is smaller when subjects have experience valuing the good in real markets or through repeated experimental trials. In contrast to Horowitz and McConnell, we find the disparity is significantly smaller in studies using incentive-compatible elicitation mechanisms. The disparity is smaller in more recent studies, an effect that is attributable only in part to changes in study characteristics.

Recent findings have shown that even without the ability to customize a product, individuals pay more for goods that they assembled. In this paper we examine which components of this creation process account for this increase in valuation, and whether it operates equally for owners and non-owners of the self-assembled object. Based on the self-extension theory of ownership, we propose a psychological mechanism by which the assembly process strengthens the self-object association. In three experiments, we find that – although witnessing the assembly process or assembling a similar product can increase participants’ evaluation of, and attachment to, a product that they own – a greater and more consistent increase in valuation and attachment arises when owners assemble their product themselves. Seemingly, merely learning about the assembly process plays only a small role in enhancing value; for substantial increases in value, one must actually assemble the product oneself. Contrary to the previous findings on the effects of labour on willingness to pay, we find little effect of product assembly among non-owners of the product. We suggest that self-assembly encourages objects to be incorporated into the self, but that this occurs most effectively when one owns the product. Keywords: product assembly,

The common finding that selling prices exceed buying prices (the so-called endowment effect) is typically explained by the assumptions that consumers evaluate potential transactions with respect to their current holdings and that the owners of a good regard its potential loss to be more significant than nonowners regard its potential acquisition. In contrast to this "pain-of-losing" account, the authors propose that the endowment effect reflects a reluctance to trade on terms that appear unfavorable with respect to salient reference prices. In six experiments (and eight more summarized in appendixes), the authors show that manipulations that reduce the gap between valuations and reference prices reduce or eliminate the endowment effect. These results suggest that the endowment effect is often best construed as an aversion to bad deals rather than an aversion to losing possessions.

Human decision making has become one of the major research-foci in economics, marketing and in neuroscience. This study integrates perspectives from these disciplines by examining neurophysiological correlates to Reference-dependence of utility evaluations in real market contexts both before and after choice. First, by comparing buying and selling decisions, we observe an activation of the amygdala only in the latter. We interpret this as loss aversion with respect to prior possessions. This finding contributes to the settling of an ongoing fundamental dispute in economic theory by indicating the absence of loss aversion for money in routine transactions. Second, ex post satisfaction statements are accompanied by an activation of the reward processing orbitofrontal cortex, if the evaluation context is framed by a high external reference price instead of a lower internal reference price. This indicates a nonrational Reference-dependence – despite the neoclassical view of a rational Homo Economicus – of satisfaction measures and challenges a central marketing variable.

Loss aversion and reference dependence are 2 keystones of behavioral theories of choice, but little is known about their underlying cognitive processes. We suggest an additional account for loss aversion that supplements the current account of the value encoding of attributes as gains or losses relative to a reference point, introducing a value construction account. Value construction suggests that loss aversion results from biased evaluations during information search and comparison processes. We develop hypotheses that identify the influence of both accounts and examine process-tracing data for evidence. Our data suggest that loss aversion is the result of the initial direct encoding of losses that leads to the subsequent process of directional comparisons distorting attribute valuations and the final choice.

This research explored the role of anticipated negative feelings in the observed disparity between buying and selling prices for the same endowed object. We assumed that anticipated negative reactions to losses deter people from trading an endowed object and therefore psychological variables that attenuate the emotional response to negative events should further reduce the price disparity between buyers and sellers. In 3 studies, we tested whether factors that either decrease concern about negative feelings (e.g., positive mood, framing of the transaction as involving no action) or increase the anticipated negative reaction to failure to act (e.g., priming errors of omission) further eliminate the disparity between buying and selling prices. These studies provide a novel conceptualization of the endowment bias and, more generally, illustrate the role of anticipated negative feelings in decision making.

ABSTRACT Recent studies have suggested that the endowment effect may actually be a type of self-referent cognitive bias due to the mere ownership of an object. However, it is not adequately understood how the ownership of an object affects the endowment effect. The current research is the first to explore if the endowment effect could be extended to different ownerships. The results suggest that the endowment effect extends to goods owned by their mothers, romantic partners and close friends, but not acquaintances. Furthermore, the level of intimacy between individuals and mothers/romantic partners/close friends/acquaintances mediates the relationship between the effect of ownership and the extensibility of the endowment effect. These findings are consistent with the mere ownership effect that ownership increases valuation by enhancing the salience of the self.