Thinking, Fast and Slow

illustrate the power of these concepts : Colin Camerer, “Three Cheers—
Psychological, Theoretical, Empirical—for Loss Aversion,” Journal of
Marketing Research 42 (2005): 129–33. Colin F. Camerer, “Prospect
Theory in the Wild: Evidence from the Field,” in Choices, Values, and
Frames , ed. Daniel Kahneman and Amos Tversky (New York: Russell
Sage Foundation, 2000), 288–300.
condo apartments in Boston : David Genesove and Christopher Mayer,
“Loss Aversion and Seller Behavior: Evidence from the Housing Market,”
Quarterly Journal of Economics 116 (2001): 1233–60.
effect of trading experience : John A. List, “Does Market Experience
Eliminate Market Anomalies?” Quarterly Journal of Economics 118
(2003): 47–71.
Jack Knetsch also : Jack L. Knetsch, “The Endowment Effect and
Evidence of Nonreversible Indifference Curves,” American Economic
Review 79 (1989): 1277–84.
ongoing debate about the endowment effect : Charles R. Plott and Kathryn
Zeiler, “The Willingness to Pay–Willingness to Accept Gap, the
‘Endowment Effect,’ Subject Misconceptions, and Experimental
Procedures for Eliciting Valuations,” American Economic Review 95
(2005): 530–45. Charles Plott, a leading experimental economist, has
been very skeptical of the endowment effect and has attempted to show
that it is not a “fundamental aspect of human preference” but rather an
outcome of inferior technique. Plott and Zeiler believe that participants who
show the endowment effect are under some misconception about what
their true values are, and they modified the procedures of the original
experiments to eliminate the misconceptions. They devised an elaborate
training procedure in which the participants experienced the roles of both
buyers and sellers, and were explicitly taught to assess their true values.
As expected, the endowment effect disappeared. Plott and Zeiler view
their method as an important improvement of technique. Psychologists
would consider the method severely deficient, because it communicates to
the participants a message of what the experimenters consider
appropriate behavior, which happens to coincide with the experimenters’
theory. Plott and Zeiler’s favored version of Kne {ers): tsch’s exchange
experiment is similarly biased: It does not allow the owner of the good to
have physical possession of it, which is crucial to the effect. See Charles
R. Plott and Kathryn Zeiler, “Exchange Asymmetries Incorrectly Interpreted
as Evidence of Endowment Effect Theory and Prospect Theory?”
American Economic Review 97 (2007): 1449–66. There may be an
impasse here, where each side rejects the methods required by the other.
People who are poor : In their studies of decision making under poverty,