Frank Wesley Marlowe (1954-2019)

People often value an item more when they own it than when it is available for purchase, and consequently are relatively reluctant to trade. This is the “endowment effect”, which has been widely documented in human populations and also in some non-human species. This paper develops a simple model in which it is adaptive to have a bias against trade, potentially explaining the basis of the endowment effect. The bias against trade arises from the...