Endowment Effect in Chimpanzees Can Be Turned On and Off

Science Daily
July 5, 2012

Groundbreaking new research in the field of "evolutionary analysis in law" not only provides additional evidence that chimpanzees share the controversial human psychological trait known as the endowment effect -- which in humans has implications for law -- but also shows the effect can be turned on or off for single objects, depending on their immediate situational usefulness.

In humans, the endowment effect causes people to consider an item they have just come to possess as higher in value than the maximum price they would have paid to acquire it just a moment before. Economists and lawyers typically assume this will not be the case. And some consider the endowment effect a human-centered fluke, subject to widespread and seemingly unpredictable variation. The origins of the quirk, and satisfying explanations for how it varies, have proved elusive.

In this new research, Vanderbilt University professor Owen Jones, who is one of the nation's few professors of both law and biology, and evolutionary biologist Sarah Brosnan of Georgia State University, developed and tested predictions rooted in evolutionary theory about when and how the endowment effect would appear.

Drawing on prior theoretical work by Jones on the evolution of seemingly "irrational" behaviors, Brosnan and Jones found consistency between chimpanzees and humans with respect to the existence of the endowment effect and, more importantly, showed that variations in the prevalence of the effect could be predicted.

"These results strongly support the idea that the endowment effect reflects the deep influence of evolutionary processes -- notably natural selection -- on psychological predispositions that affect how brains ascribe value to objects. The endowment effect, and several other seemingly quirky psychological predispositions, may trace to the sharp differences between modern environments and ancestral ones, in which these predispositions may once have minimized losses and maximized gains," said Jones, the New York Alumni Chancellor's Chair in Law, professor of biological sciences and director of the MacArthur Foundation Research Network on Law and Neuroscience.

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