Posted by The Situationist Staff on May 14, 2008
Sarah F. Brosnan, Owen D. Jones, Susan P. Lambeth, Mary Catherine Mareno, Amanda S. Richardson, and Steven Schapiro, posted their article, “Endowment Effects in Chimpanzees” 17 Current Biology, 1704-1707 (October 9, 2007) on SSRN. Here’s the abstract.
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Human behavior is not always consistent with standard rational choice predictions. The much-investigated variety of apparent deviations from rational choice predictions provides a promising arena for the merger of economics and biology. Although little is known about the extent to which other species also exhibit these seemingly irrational patterns of human decision-making and choice behavior, similarities across species would suggest a common evolutionary root to the phenomena.
The present study investigated whether chimpanzees exhibit an endowment effect, a seemingly paradoxical behavior in which humans tend to value a good they have just come to possess more than they would have only a moment before. We show the first evidence that chimpanzees do exhibit an endowment effect, favoring items they just received more than items they prefer that could be acquired through exchange. Moreover, we demonstrate that – as predicted – the effect is far stronger for food than for less evolutionarily salient objects, perhaps due to historically greater risks associated with keeping a valuable item versus attempting to exchange it for another. These findings suggest that the larger set of seeming deviations from rational choice predictions may be common to humans and chimpanzees, and that the evaluation of these through a lens of evolutionary relevance may yield further insights in both humans and other species.
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To read about a related paper, see “A New Theory of the Endowment Effect.”
Posted in Abstracts, Behavioral Economics, Choice Myth, Uncategorized | Tagged: behavioral biology, Behavioral Economics, chimpanzees, economics, endowment effect, evolutionary analysis in law, evolutionary biology, irrationality, Law, property, prospect theory, rationality | 1 Comment »
Posted by The Situationist Staff on April 26, 2008
Owen Jones and Sarah Brosnan have posted their article, “Law, Biology, and Property: A New Theory of the Endowment Effect” 48 William & Mary Law Review (2008) on SSRN. We’ve included the abstract below.
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Recent work at the intersection of law and behavioral biology has suggested numerous contexts in which legal thinking could benefit by integrating knowledge from behavioral biology. In one of those contexts, behavioral biology may help to provide theoretical foundation for, and potentially increased predictive power concerning, various psychological traits relevant to law. This Article describes an experiment that explores that context.
The paradoxical psychological bias known as the endowment effect puzzles economists, skews market behavior, impedes efficient exchange of goods and rights, and thereby poses important problems for law. Although the effect is known to vary widely, there are at present no satisfying explanations for why it manifests when and how it does. Drawing on evolutionary biology, this Article provides a new theory of the endowment effect. Briefly, we hypothesize that the endowment effect is an evolved propensity of humans and, further, that the degree to which an item is evolutionarily relevant will affect the strength of the endowment effect. The theory generates a novel combination of three predictions. These are: (1) the effect is likely to be observable in many other species, including close primate relatives; (2) the prevalence of the effect in other species is likely to vary across items; and (3) the prevalence of the endowment effect will increase or decrease, respectively, with the increasing or decreasing evolutionary salience of the item in question.
The authors tested these predictions in a chimpanzee (Pan troglodytes) experiment, recently published in Current Biology. The data, further explored here, are consistent with each of the three predictions. Consequently, this theory may explain why the endowment effect exists in humans and other species. It may also help both to predict and to explain some of the variability in the effect when it does manifest. And, more broadly, the results of the experiment suggest that combining life science and social science perspectives could lead to a more coherent framework for understanding the wider variety of other cognitive heuristics and biases relevant to law.
Posted in Abstracts, Behavioral Economics | Tagged: behavioral biology, Behavioral Economics, chimpanzees, economics, endowment effect, evolutionary analysis in law, evolutionary biology, Law, property, prospect theory | Leave a Comment »