TY  - GEN
AU  - Knetsch, Jack L.
SN  - 0002-8282
AU  - Knetsch, Jack L.
LA  - eng
CN  - ENP-07ce26cf-f54a-4c01-a15a-62c602f0c7e0
TI  - The endowment effect and evidence of nonreversible indifference curves
PY  - 1989
AB  - Indifference curves are normally taken to indicate corresponding tradeoffs of goods A for B or B for A over the same interval: "the rate of commodity substitution at a point on an indifference curve is the same for movements in either direction." Recent empirical findings of asymmetric evaluations of gains and losses imply that the presumed reversibility may not accurately reflect preferences, and that people commonly make choices that differ depending on the direction of proposed trades. These valuation differences based on responses to hypothetical survey questions prompted further, more severe, tests of the disparity using a variety of real exchange experimental designs. The results have been much the same. Even when exchanges of real goods and actual cash payments motivated the evaluations, the compensation demanded to give up an entitlement has been reported to far exceed the comparable payment measure of value. While some studies have found that the size of an initial disparity may decrease over successive valuation trials for some entitlements, differences between the measures generally remain.
ER  -