Trading experience modulates anterior insula to reduce the endowment effect

Kentaro Asai, Seda Ertac, Ali Hortacsu, John List, Howard Nusbaum, Lester Tong and Karen Ye

Framed Field Experiments from The Field Experiments Website

Abstract: People often demand a greater price when selling goods that they own than they would pay to purchase the same goods- a well-known economic bias called the endowment effect. The endowment effect has been found to be muted among experienced traders, but little is known about how trading experience reduces the endowment effect. We show that when selling, experienced traders exhibit lower right anterior insula activity, but no differences in nucleus accumbens or orbitofrontal activation, compared with inexperienced traders. Furthermore, insula activation mediates the effect of experience on the endowment effect. Similar results are obtained for inexperienced traders who are incentivized to gain trading experience. This finding indicates that frequent trading likely mitigates the endowment effect indirectly by modifying negative affective responses in the context of selling.

Date: 2016
References: Add references at CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
http://s3.amazonaws.com/fieldexperiments-papers2/papers/00717.pdf

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:feb:framed:00717

Access Statistics for this paper

More papers in Framed Field Experiments from The Field Experiments Website
Bibliographic data for series maintained by Francesca Pagnotta ().