Loss Aversion and Welfare Economics

Alistair Munro

University of East Anglia Discussion Papers in Economics from School of Economics, University of East Anglia, Norwich, UK.

Abstract: A volume of recent experimental evidence suggests that individual preferences may not be independent of the consumer's vantage point. In particular agents may suffer from loss aversion (also known as the endowment effect and status quo bias). Allocations which appear desirable ex ante may therefore not be so ex post which poses considerable problems for the traditional propositions of welfare economics.

Keywords: CONSUMERS; SOCIAL WELFARE (search for similar items in EconPapers)
JEL-codes: D11 (search for similar items in EconPapers)
Pages: 23 pages
Date: 1998
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