Preschoolers and the Endowment Effect

Da Silva, Sergio and Moreira, Bruno and Da Costa Jr, Newton (2014): Preschoolers and the Endowment Effect. Published in: PLoS One , Vol. 9, No. 10 (9 October 2014): e109520.

Abstract

We show that preschoolers exhibit the endowment effect as evidenced by experiments where children generally chose to keep their own toys rather than trading them for similar ones. Furthermore, we relate the emergence of this effect to children’s innate psychobiological traits—emotional state, gender, handedness, and digit ratio. The trials were conducted with 141 children across 6 kindergartens. We also found support that children, like adults, exhibit a preference for physical possession as opposed to ownership. As with adults, emotions also seem to matter, as children who were described as quiet and calm were more likely to present the endowment effect. Also of note, right-handed children described as quiet were more likely to exhibit the phenomenon. Furthermore, female children were generally found to be calmer than males, while males tended to be more fearful than females. This result was also previously found in teenagers.

• Item Type: MPRA Paper
• Language: English
• Keywords: Endowment effect; Children
• Subjects: D - Microeconomics > D0 - General > D03 - Behavioral Microeconomics: Underlying Principles; D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D87 - Neuroeconomics

References

1. Hanemann WM (1991) Willingness to pay and willingness to accept: How much can they differ? American Economic Review 81: 635–647.

2. Trepel C, Fox CR, Poldrack RA (2005) Prospect theory on the brain? Toward a cognitive neuroscience of decision under risk. Cognitive Brain Research 23: 34–50.

3. Knutson B, Wimmer GE, Rick S, Hollon NG, Prelec D, et al. (2008) Neural antecedents of the endowment effect. Neuron 58: 814–822.

4. Marsh B, Kacelnik A (2002) Framing effects and risky decisions in starlings. PNAS 99: 3352–3355.

5. Apicella CL, Azevedo EM, Fowler JH, Christakis NA (2014) Evolutionary origins of the endowment effect: Evidence from hunter-gatherers. American Economic Review 104: 1793–1805.

6. Gintis H (2007) The evolution of private property. Journal of Economic Behavior & Organization 64: 1–16.

7. Harbaugh WT, Krause K, Vesterlund L (2001) Are adults better behaved than children? Age, experience, and the endowment effect. Economics Letters 70: 175–181.

8. Zhang Y, Fishbach A (2005) The role of anticipated emotions in the endowment effect. Journal of Consumer Psychology 15: 316–324.

9. Da Silva S, Baldo D, Matsushita R (2013) Biological correlates of the Allais paradox. Applied Economics 45: 555–568.

10. Manning JT, Scutt D, Wilson J, Lewis-Jones DI (1998) The ratio of 2nd to 4th digit length: A predictor of sperm numbers and concentrations of testosterone, luteinizing hormone and oestrogen. Human Reproduction 13: 3000–3004.

11. Russell JA (1980) A circumplex model of affect. Journal of Personality and Social Psychology 39: 1161–1178.

12. Deb S, Chatterjee P, Walsh K (2010) Anxiety among high school students in India: Comparisons across gender, school type, social strata and perceptions of quality time with parents. Australian Journal of Educational & Developmental Psychology 10: 18–31.

13. Moreira B, Matsushita R, Da Silva S (2010) Risk-seeking behavior of preschool children in a gambling task. Journal of Economic Psychology 31: 794–801.

14. Reb J, Connolly T (2007) Possession, feelings of ownership and the endowment effect. Judgment and Decision Making 2: 107–114.

15. Lin CH, Chuang SC, Kao DT, Kung CY (2006) The role of emotions in the endowment effect. Journal of Economic Psychology 27: 589–597.

16. Martinez LF, Zeelenberg M, Rijsman JB (2011) Regret, disappointment and the endowment effect. Journal of Economic Psychology 32: 962–968.