Researchers have started studying the evolutionary roots of the endowment effect:
Owen Jones, a professor of law and biology at Vanderbilt University, and Sarah Brosnan, a primatologist at Georgia State University, suspect the answer is that, in the evolutionary past, giving things up, even when an apparently fair exchange seemed to be on offer, was just too risky. These days, as they discuss in a paper just published in the William and Mary Law Review, there are contracts, rights and other ways of enforcing bargains. Animal societies have none of these mechanisms. As Adam Smith observed in the “Wealth of Nations”, “nobody ever saw a dog make a fair and deliberate exchange of one bone for another with another dog.”
To put flesh on their idea, Dr Jones and Dr Brosnan have been trying to overcome Smith’s observation by training chimpanzees to trade. In 2006 Keith Chen of Yale University showed that capuchin monkeys could learn to do so, and also seemed to exhibit the endowment effect. Chimps, it turns out, can manage to truck too. In the chimp study, tubes of peanut butter and frozen juice bars were used. Both treats were designed to be difficult to eat quickly. This makes it possible for animals that would otherwise consume any food they were given at the first opportunity at least to consider the idea of an exchange.
When presented with a choice, 60% of the chimps preferred peanut butter to juice. However, when they were endowed with peanut butter, 80% of them chose to keep it instead of exchanging it for juice. It was as if the peanut butter became more valuable as soon as it was possessed. And an opposite endowment effect was observed when the chimps were given juice.
Observing the endowment effect in three primate species suggests it does, indeed, have deep evolutionary roots. Better still, before they started work Dr Jones and Dr Brosnan predicted that the strength of the effect would vary with the evolutionary salience of the item in question. Lo and behold, when they tried the same experiments using bone and rope toys, no endowment effect was seen. Food is vital. Toys are not.
Steffen Huck, an economist at University College, London, has an alternative hypothesis:
In societies with markets, customers can go elsewhere. But in a small, tribal society there may be no alternative seller. In that case, those who were reluctant to trade might get better prices. It may thus make sense for an owner to be psychologically predisposed to hold out for a high price as soon as someone else expresses interest in one of his possessions—something Dr Huck’s models predict would, indeed, be evolutionarily beneficial.