The endowment effect, status quo bias and loss aversion: Rational alternative explanation

Arbeitspapier

The endowment effect, status quo bias, and loss aversion are robust and well documented results from experimental psychology. They introduce a wedge between the prices at which one is willing to sell or buy a good. The objective of this paper is to address this wedge. We show that the presence of asymmetric information in a rational-agent framework can account for the endowment effect, status quo bias and loss aversion as well as psychology-based explanations proposed in the past.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Reihe Ökonomie / Economics Series ; No. 92

Classification and Topics

• Classification: Wirtschaft ; Criteria for Decision-Making under Risk and Uncertainty ; Asymmetric and Private Information; Mechanism Design ; Insurance; Insurance Companies; Actuarial Studies
• Subject: endowment effect ; status quo bias ; loss aversion ; asymmetric information ; bid/ask spread ; Willingness to pay ; Risikoaversion ; Rationale Erwartung ; Asymmetrische Information ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Dupont, Dominique Y. ; Lee, Gabriel S.
• Event: Veröffentlichung
• (who): Institute for Advanced Studies (IHS)
• (where): Vienna
• (when): 2001

Further information

• Handle: http://hdl.handle.net/10419/71256
• Last update: 10.03.2025, 11:44 AM CET