Thinking, Fast and Slow - Daniel Kahneman

half of the tokens will change hands: Imagine that all the participants are ordered in a line by
the redemption value assigned to them. Now randomly allocate tokens to half the individuals
in the line. Half of the people in the front of the line will not have a token, and half of the
people at the end of the line will own one. These people (half of the total) are expected to
move by trading places with each other, so that in the end everyone in the first half of the line
has a token, and no one behind them does.
Brain recordings: Brian Knutson et al., “Neural Antecedents of the Endowment Effect,”
Neuron 58 (2008): 814–22. Brian Knutson an {an utson et ad Stephanie M. Greer,
“Anticipatory Affect: Neural Correlates and Consequences for Choice,” Philosophical
Transactions of the Royal Society B 363 (2008): 3771–86.
riskless and risky decisions: A review of the price of risk, based on “international data from 16
different countries during over 100 years,” yielded an estimate of 2.3, “in striking agreement
with estimates obtained in the very different methodology of laboratory experiments of
individual decision-making”: Moshe Levy, “Loss Aversion and the Price of Risk,”
Quantitative Finance 10 (2010): 1009–22.
effect of price increases: Miles O. Bidwel, Bruce X. Wang, and J. Douglas Zona, “An Analysis
of Asymmetric Demand Response to Price Changes: The Case of Local Telephone Calls,”
Journal of Regulatory Economics 8 (1995): 285–98. Bruce G. S. Hardie, Eric J. Johnson, and
Peter S. Fader, “Modeling Loss Aversion and Reference Dependence Effects on Brand
Choice,” Marketing Science 12 (1993): 378–94.
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