Forum for Science, Industry and Business

Sponsored by:     3M 
Search our Site:

 

Common bias known as the 'endowment effect' not present in hunter-gatherer societies

29.10.2013
Centuries of economic theory have been based on one simple premise: when given a choice between two items, people make the rational decision and select the one they value more. But as with many simple premises, this one has a flaw in that it is demonstrably untrue.

The fields of psychology and behavioral economics have experimentally identified a laundry list of common biases that cause people to act against their own apparent interests. One of these biases — the mere fact of possessing something raises its value to its owner — is known as the “endowment effect.”

A new interdisciplinary study from the University of Pennsylvania has delved into whether this bias is truly universal, and whether it might have been present in humanity’s evolutionary past.

The study was led by Coren Apicella, an assistant professor in Penn’s School of Arts and Sciences’ Department of Psychology, and Eduardo Azevedo, an assistant professor in Wharton’s Department of Business Economics and Public Policy. They collaborated with Yale’s Nicholas Christakis and the University of California, San Diego’s James Fowler.

It will be published in the American Economic Review.

A classic endowment effect experiments involves giving participants one of two items, such as a chocolate bar and a mug, and then asking whether they would like to trade for the other. As the starting item is selected at random, there should be a 50 percent chance that participants initially receive the item they like best and thus a 50 percent chance that they will trade.

“What we see, however, is that people trade only about 10 percent of the time,” Azevedo said. “Simply telling someone they own something makes them value it more. That is, the way you ask the question changes what item people prefer, unlike what you would expect from rational economic behavior.”

One problem with these experiments is that they generally involve participants from so-called “WEIRD” — western, educated, industrialized, rich and democratic — societies. Apicella drew on her decade-long study of the Hadza people of Tanzania to provide a new perspective. The Hadza are one of the last hunter-gatherer societies on Earth, living in small, nomadic camps that communally share nearly all their possessions.

“We wanted to examine whether the endowment effect was something that occurs in non-WEIRD societies, since they represent the vast majority of human populations that have ever existed,” Apicella said. “Even if it’s not a perfect window into our past, it’s at least a different perspective than what you get when you study your average college student. The fact that the Hadza remain relatively isolated from Western culture, media and ideals makes them a good group with which to investigate the history and universality of biases like the endowment effect.”

The history of the endowment effect is of particular interest to evolutionary psychologists, as experiments to test its presence in non-human primates, such as orangutans, chimpanzees and gorillas, has been met with mixed results. That some non-human primates exhibit the bias could mean that it was present in the last common ancestor between them and humans, but it could also mean that they learned the behavior by participating in other reward-based studies.

The area of North Tanzania where the Hadza live provided a natural way to further investigate the role of culture in transmitting this bias, as a large lake separates some, but not all, of the camps from a nearby village. People living in the camps on the near side of the lake have much more frequent interactions with tourists and commerce, often buying items from stores in the village, or selling bows and arrows to visitors.

The researchers conducted versions of the endowment effect experiment in several different camps, and compared the results.

In order to avoid bias from items that might be more or less valuable in the environment the Hadza live in, the researchers constructed the experiments so that participants chose between items that had only cosmetic differences. Participants would be given either a package of cookies, with the option to trade it for a different flavor, or given a lighter, with the option to trade it for a different color. They also ensured that the participant knew that the variety he or she received at the start was a random choice, and varied whether the participant got to physically hold the item before given the option to trade it for another variety.

“We wanted to use both food and tools, as experiments with non-human primates show an endowment effect for the former but not the latter,” Apicella said. “However, we saw that it didn’t make a difference whether a person was choosing between cookies or lighters. The difference-maker was their relative level of isolation from modern life.”

“The more isolated Hadza traded about 50 percent of the time — which is what rational people should do,” Azevedo said. People near the village traded about 25 percent of the time, which is much closer to the 10 percent we see with Western students.”

“To make sure this wasn’t a case of the more capitalistic people moving closer to the village, we also asked the people about their social networks,” Azevedo said. “The percentage of people who named someone in a distant camp was very small. Quantitatively, it seems impossible that the difference in endowment effect between two camps could be explained by migration.”

With that potential caveat accounted for, one explanation for the apparent lack of an endowment effect in the more isolated camps is that the bias is a learned behavior that comes with exposure to capitalistic societies. However, an alternative explanation could be that both groups experience the effect, but it is suppressed in the more communal groups by social pressures.

“We need to study this further to see which explanation holds,” Apicella said. “Either way the results suggest that these isolated hunter-gatherers are more rational than the average western consumer when it comes to economic decisions.”

The research was supported by funding from the Science of Generosity Initiative of the University of Notre Dame and the John Templeton Foundation and by the National Institute on Aging.

Evan Lerner | EurekAlert!
Further information:
http://www.upenn.edu

More articles from Interdisciplinary Research:

nachricht Easier Diagnosis of Esophageal Cancer
06.03.2017 | Helmholtz Zentrum München - Deutsches Forschungszentrum für Gesundheit und Umwelt

nachricht Sandia uses confined nanoparticles to improve hydrogen storage materials performance
27.02.2017 | DOE/Sandia National Laboratories

All articles from Interdisciplinary Research >>>

The most recent press releases about innovation >>>

Die letzten 5 Focus-News des innovations-reports im Überblick:

Im Focus: A Challenging European Research Project to Develop New Tiny Microscopes

The Institute of Semiconductor Technology and the Institute of Physical and Theoretical Chemistry, both members of the Laboratory for Emerging Nanometrology (LENA), at Technische Universität Braunschweig are partners in a new European research project entitled ChipScope, which aims to develop a completely new and extremely small optical microscope capable of observing the interior of living cells in real time. A consortium of 7 partners from 5 countries will tackle this issue with very ambitious objectives during a four-year research program.

To demonstrate the usefulness of this new scientific tool, at the end of the project the developed chip-sized microscope will be used to observe in real-time...

Im Focus: Giant Magnetic Fields in the Universe

Astronomers from Bonn and Tautenburg in Thuringia (Germany) used the 100-m radio telescope at Effelsberg to observe several galaxy clusters. At the edges of these large accumulations of dark matter, stellar systems (galaxies), hot gas, and charged particles, they found magnetic fields that are exceptionally ordered over distances of many million light years. This makes them the most extended magnetic fields in the universe known so far.

The results will be published on March 22 in the journal „Astronomy & Astrophysics“.

Galaxy clusters are the largest gravitationally bound structures in the universe. With a typical extent of about 10 million light years, i.e. 100 times the...

Im Focus: Tracing down linear ubiquitination

Researchers at the Goethe University Frankfurt, together with partners from the University of Tübingen in Germany and Queen Mary University as well as Francis Crick Institute from London (UK) have developed a novel technology to decipher the secret ubiquitin code.

Ubiquitin is a small protein that can be linked to other cellular proteins, thereby controlling and modulating their functions. The attachment occurs in many...

Im Focus: Perovskite edges can be tuned for optoelectronic performance

Layered 2D material improves efficiency for solar cells and LEDs

In the eternal search for next generation high-efficiency solar cells and LEDs, scientists at Los Alamos National Laboratory and their partners are creating...

Im Focus: Polymer-coated silicon nanosheets as alternative to graphene: A perfect team for nanoelectronics

Silicon nanosheets are thin, two-dimensional layers with exceptional optoelectronic properties very similar to those of graphene. Albeit, the nanosheets are less stable. Now researchers at the Technical University of Munich (TUM) have, for the first time ever, produced a composite material combining silicon nanosheets and a polymer that is both UV-resistant and easy to process. This brings the scientists a significant step closer to industrial applications like flexible displays and photosensors.

Silicon nanosheets are thin, two-dimensional layers with exceptional optoelectronic properties very similar to those of graphene. Albeit, the nanosheets are...

All Focus news of the innovation-report >>>

Anzeige

Anzeige

Event News

International Land Use Symposium ILUS 2017: Call for Abstracts and Registration open

20.03.2017 | Event News

CONNECT 2017: International congress on connective tissue

14.03.2017 | Event News

ICTM Conference: Turbine Construction between Big Data and Additive Manufacturing

07.03.2017 | Event News

 
Latest News

Researchers shoot for success with simulations of laser pulse-material interactions

29.03.2017 | Materials Sciences

Igniting a solar flare in the corona with lower-atmosphere kindling

29.03.2017 | Physics and Astronomy

As sea level rises, much of Honolulu and Waikiki vulnerable to groundwater inundation

29.03.2017 | Earth Sciences

VideoLinks
B2B-VideoLinks
More VideoLinks >>>