The endowment effect as blessing

Arbeitspapier

We study the idea that seemingly unrelated behavioral biases can coevolve if they jointly compensate for the errors that any one of them would give rise to in isolation. We suggest that the "endowment effect" and the "winner's curse" could have jointly survived natural selection together. We develop a new family of "hybrid-replicator" dynamics. Under such dynamics, biases survive in the population for a long period of time even if they only partially compensate for each other and despite the fact that the rational type's payoff is strictly larger than the payoffs of all other types.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Working Paper ; No. 2017-06

Classification and Topics

• Classification: Wirtschaft ; Stochastic and Dynamic Games; Evolutionary Games; Repeated Games ; Asymmetric and Private Information; Mechanism Design
• Subject: Endowment Effect ; Winner's Curse ; Bounded Rationality ; Evolution

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Frenkel, Sivan ; Heller, Yuval ; Teper, Roee
• Event: Veröffentlichung
• (who): Bar-Ilan University, Department of Economics
• (where): Ramat-Gan
• (when): 2017

Further information

• Handle: http://hdl.handle.net/10419/173750
• Last update: 10.03.2025, 11:45 AM CET