Neoclassical Theory vs Prospect Theory
John A. List
Guillaume Dubert
I – Aim of the experience
II – Prospect theory vs neoclassical hypothesis
III – Experimental design
IV – Results
What List aims to demonstrate
1 . Endowment effect : People attribute more value to things simply because they possess them.
2 . The influence of the endowment effect diminishes with market experience
Prospect theory and neoclassical theory
Experiments :
Context :
Experiments
Panel A :
Choice
Panel B:
Panel C :
Treatment
Mug
Both
Neither
Candy
Initial endowment
Mug
Mug and Candy
Nothing
Candy
Results
1. Confirmation of the endowment effect
Results
2. Impact of market experience