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

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Dupont, Dominique Y. and Lee, Gabriel S. (2002) The endowment effect, status quo bias and loss aversion: rational alternative explanation. Journal of Risk and Uncertainty, 25 (1). pp. 87-101. ISSN 0895-5646

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Abstract: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 also account for the endowment effect, status quo bias and loss aversion without invoking psychology-based explanations proposed in the past.
Item Type:Article
Copyright:© 2002 Springer
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Link to this item:http://purl.utwente.nl/publications/43298
Official URL:http://dx.doi.org/10.1023/A:1016371414952
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