Frenkel, Sivan and Heller, Yuval and Teper, Roee (2017): The Endowment Effect as blessing. Forthcoming in: International Economic Review No. forthcoming
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Abstract
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. Next we develop a new family of “hybrid-replicator” dynamics. We show that 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.
Item Type: | MPRA Paper |
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Original Title: | The Endowment Effect as blessing |
Language: | English |
Keywords: | Endowment Effect, Winner's Curse, Bounded Rationality, Evolution. |
Subjects: | D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D82 - Asymmetric and Private Information ; Mechanism Design C - Mathematical and Quantitative Methods > C7 - Game Theory and Bargaining Theory > C73 - Stochastic and Dynamic Games ; Evolutionary Games ; Repeated Games |
Item ID: | 79570 |
Depositing User: | Yuval Heller |
Date Deposited: | 08 Jun 2017 05:46 |
Last Modified: | 26 Sep 2019 13:58 |
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URI: | https://mpra.ub.uni-muenchen.de/id/eprint/79570 |
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Endowment as a blessing. (deposited 13 Jun 2012 14:47)
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Endowment as a blessing. (deposited 24 Aug 2013 18:15)
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Endowment as a blessing. (deposited 31 Mar 2014 14:49)
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The Endowment Effect as a blessing. (deposited 25 Jul 2014 17:49)
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The Endowment Effect as a blessing. (deposited 06 Feb 2015 10:05)
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The Endowment Effect as blessing. (deposited 01 Oct 2016 10:14)
- The Endowment Effect as blessing. (deposited 08 Jun 2017 05:46) [Currently Displayed]
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The Endowment Effect as blessing. (deposited 01 Oct 2016 10:14)
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The Endowment Effect as a blessing. (deposited 06 Feb 2015 10:05)
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The Endowment Effect as a blessing. (deposited 25 Jul 2014 17:49)
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Endowment as a blessing. (deposited 31 Mar 2014 14:49)
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Endowment as a blessing. (deposited 24 Aug 2013 18:15)