A note on negativity bias and framing response asymmetry

Bounded rationality, Framing-invariance, Loss-aversion,

Endowment effect

A vast body of experimental studies in psychology and economics finds that individuals tend to value goods more and demand higher prices when they own the goods than they would be willing to pay for the good when they do not already own it. Although research on the endowment effect has been done for more than three decades, it’s theory, empirical methodology, results, and implications continue to be topics of intense discussion among economists, lawyers and psychologists. In this entry, we review the theoretical framework and empirical evidence on the endowment effect and highlight some implications for law and economics research

Trading under the influence: The effects of psychological ownership on economic decision-making

The current chapter examines the role of psychological ownership in different economic decision-making contexts. These include the allocation of personal resources, trade-offs between costs and benefits, and subjective valuations reflecting underlying preferences. Economic decision-making usually coincides with a change in legal ownership. However, feelings of ownership need not coincide with actually owning or possessing anything. We investigate the influence of psychological and legal ownership on buying and selling (as seen in the endowment effect), general bargaining behavior, and prosocial decision-making in the context of charitable giving. Different theoretical accounts for these economic behaviors are reviewed with a specific focus on the prominent role that psychological ownership can play as an underlying mechanism for each. In buying and selling situations, ownership of an object may change people\u27s self-perception by creating affective associations to the object and increasing its psychological value. Similarly, in bargaining and coordination decisions, different contextual cues (such as proximity) can suggest psychological ownership over objects and thereby influence cooperative behavior. Finally, psychological ownership can influence prosocial decision-making by increasing affective reactions, moral obligations, and perceived effectiveness. We close with a proposal for a holistic approach to understand the relationship between psychological ownership and economic decision-making