Does the Endowment Effect Influence Outcomes in Takings Cases? An Exploratory Look at Some Important Cases and Suggestions for Additional Research (original) (raw)
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Bridging the Property-Contract Divide: Testing the Endowment Effect in Law
Depaul Law Review, 2018
, and Jack Knetsch for reviewing earlier drafts of this Article and providing valuable feedback. I would also like to thank Rebecca Csikos, Jessy Hoch, Martin Musichi, and Amy Ray for their extraordinary research assistance. Finally, I would like to thank my wife and son for their enduring love and support. 1. Daniel Kahneman, a co-discoverer of the endowment effect, was awarded the Nobel Prize "for having integrated insights from psychological research into economic science, especially concerning human judgment and decision-making under uncertainty.
What Owners Want and Government Do: Evidence From the Oregon Experiment
Fordham Law Review, 2009
In 2004, Oregonians decisively approved Ballot Measure 37. The measure answered the calls of critics of contemporary takings jurisprudence by requiring either compensation for losses caused by land use restrictions imposed after acquisition of the property or waivers of the restrictions. Three years later, voters acted to repeal most of Measure 37 by an even greater margin. Together the birth, brief life, and rapid demise of Measure 37 comprise an unusual natural experiment in property law. The results of this experiment go to the heart of debates about regulatory takings in property law and policy. First, the Oregon experience resulted in a sea change in owners' understandings of property rights. The 2004 vote reflected the popular understanding of land use restrictions as invasions of property rights.
Does the Endowment Effect Justify Legal Intervention? The Debiasing Effect of Institutions
SSRN Electronic Journal, 2014
ABSTRACT We claim that the endowment effect rarely justifies legal intervention in private ordering. We present the first theory, to our knowledge, to explain how institutions inhibit the endowment effect without altering people’s rights to their entitlements. The endowment effect is substantially caused by anticipated regret. We show that people experience regret only when they feel responsible for the decision and can mute regret by trading through institutions that let them share responsibility with others. As entitlement holders typically transact through institutions, we expect most people to make unbiased trading decisions in real markets. We test two common institutions—agency relationships and voting—that divide responsibility between multiple actors. Each caused most subjects to debias and trade in our study. We also show that people intentionally debias by employing institutions in order to share responsibility. Thus, when people can freely transact, private ordering generally overcomes the endowment effect.
The Endowment Effect and Legal Analysis
SSRN Electronic Journal, 2002
21 Note that it does not matter whether the market price is high or low. If the market price is set very high, a large majority of each group might choose money over the good, and if the market price is set very low, a large majority might choose the good. But the percentage of subjects in each group choosing the good should be the same, within the range of random statistical variation.
The Origins, Nature, and Content of the Right to Property: Five Economic Solitudes
The thesis of this article is that the now extensive contemporary literature on the economics of property rights has generated more heat than light. Economists have invoked at least five distinct theories of ownership or property rights in their work. Unfortunately, authors frequently fail to acknowledge the existence of competing theories of property rights that stand as conceptual rivals to the theory that they, often implicitly, invoke. Nowhere is this problem more evident than in the literature on regulatory takings, a literature that has a justifiable reputation for its inconsistent conclusions. Other fields in which theories of property rights play an important role include intellectual property, the economics of contracts, competition analysis and policy, externalities, and the economics of information. This article compares and evaluates five competing theories of property rights that have been advanced and used by economists: classical liberalism, utilitarianism, legal positivism, pragmatism, and modern libertarianism. These theories present divergent accounts of the origin and the nature of ownership claims. They also conceptualize the evolution of ownership institutions as well as ownership patterns quite differently. There are also important differences in incentives that exist under institutional regimes based on each theory.
Journal of Empirical Legal Studies, 2008
The U.S. Supreme Court's decision in Kelo v. City of New London, allowing governments to force the sale of private property to promote economic development, provoked bipartisan and widespread public outrage. Given that the decision in Kelo was rendered virtually inevitable by the Court's earlier public use decisions, what accounts for the dread and dismay that the decision provoked among ordinary citizens? We conducted two experiments that represent an early effort at addressing a few of the many possible causes underlying the Kelo backlash. Together, these studies suggest that the constitutional focus on public purpose in Kelo does not fully, or even principally, explain the public outrage that followed it. Our experiments suggest that subjective attachment to property looms far larger in determining the perceived justice of a taking. We have only begun to map out the contours of this response, but these initial findings show promise in helping to build a more democratic model for the law and policies dealing with takings.
The evolution of private property
Journal of Economic Behavior & Organization, 2007
Experimental studies have shown that subjects exhibit a systematic endowment effect. No acceptable explanation for the existence of this behavior has been offered. This paper shows that the endowment effect can be modeled as respect for private property in the absence of legal institutions ensuring third-party contract enforcement. In this sense, "natural" private property has been observed in many species, in the form of recognition of territorial incumbency. We develop a model loosely based on the Hawk-Dove-Bourgeois game (Maynard Smith and Parker 1976) and the War of Attrition (Maynard Smith and Price 1973) to explain the natural evolution of private property. Journal of Economic Literature Classification: D01-Microeconomic Behavior: Underlying Principles