John Carney suggests that behavioral economists who have studied the endowment effect have misinterpreted their results. The endowment effect is what occurs when people put more value on a thing they possess vs. the same thing possessed by others. Carney argues that, by ignoring the costs associated with negotiations the behavioral economists have confused absolute valuation with net valuation. The primary cost he notes is the risk that trading partners may not follow through in a transaction.
He terms it "risk." I term it "trust." A rose by any other name......
Via Craig Newmark, who also links to a piece by Josh Wright who argues that the behavioralists' findings aren't all that robust.