Evolution and Human Behavior 33 (2012) 378–386
9 Pages Posted: 11 Oct 2013
Date Written: December 2012
The endowment effect is the seemingly irrationally tendency to immediately value a possessed item more than the opportunity to acquire the identical item when one does not already possess it. The phenomenon has broad legal implications, as it suggests a drag on trade, occasioned by inconsistent valuation of identical goods and rights. This in turn suggests that a deeper understanding of the origins and seemingly baffling variations in the magnitude of the effect, across different goods, could aid law’s more effective engagement with the phenomenon.
In prior work we tested the theory that some cognitive biases, including the endowment effect, reflect evolved adaptations. Specifically, we demonstrated that, as predicted by this perspective: 1) chimpanzees (as close relatives) also exhibit an endowment effect; 2) the magnitude of the effect varies by the kind of goods at issue; and 3) the effect is larger for goods that are evolutionarily salient than it is for those that are less so.
Here, we go further. The evolutionary perspective also predicts that the endowment effect could be turned on and off for single goods by manipulating their contextual value. We tested whether objects lacking inherent value (i.e., tools that could only extract food items when those items were both present and reachable) elicited a stronger endowment effect when they could be used as tools for obtaining evolutionarily salient goods (i.e., foods) than when they could not be used as tools. Chimpanzee subjects had opportunities to trade tools when food was not present, when food was visible but unobtainable, and when food was both visible and obtainable using the tools. We found the endowment effect for these tools existed only when they were immediately useful, showing that the effect varies as a function of context-specific utility. Such context-specific variation suggests that the variation seen in some human biases may trace predictably to behaviors that evolved to maximize gains in specific circumstances.
Keywords: endowment effect, cognitive bias, behavioral economics, law, behavioral law and economics, time shifted rationality, chimpanzee, evolution, property, behavioral biology, evolutionary biology, evolutionary analysis in law, prospect theory, loss aversion, rationality, irrationality, adaptation
JEL Classification: K00, K11, K12, K19, K30, K39, D00, D81, H30
Suggested Citation: Suggested Citation
Brosnan, Sarah F. and Jones, Owen D. and Gardner, Molly and Lambeth, Susan P. and Schapiro, Steven, Evolution and the Expression of Biases: Situational Value Changes The Endowment Effect in Chimpanzees (December 2012). Evolution and Human Behavior 33 (2012) 378–386; Vanderbilt Law and Economics Research Paper No. 13-28. Available at SSRN: https://ssrn.com/abstract=2339290