What explains observed reluctance to trade? A comprehensive literature review

Kathryn Zeiler

Chapter 13 in Research Handbook on Behavioral Law and Economics, 2018, pp 347-430 from Edward Elgar Publishing

Abstract: Valuation gaps and exchange asymmetries are among the most widely studied phenomena in the field of behavioral economics. This chapter presents the current state of the social science literature related to observed reluctance to trade. Numerous theories have been proposed and only a few might be safe to rule out based on the evidence to date. A number of theories have been developed and tested by both economists and psychologists including endowment theory, substitution theory, expectation theory, preference uncertainty, mere-ownership theory, enhancement theory, subject misconceptions, and regret avoidance. The chapter walks through each proposed theory, cataloging the evidence for and against. While some theories have garnered more support from the data than others, no single theory yet deserves the title of leading theory. As this chapter makes clear, much more work is required to develop a theory or set of theories worthy of designation as the leading theory.

Keywords: Economics and Finance; Law - Academic (search for similar items in EconPapers)
Date: 2018
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