Trading changes how brain processes selling decisions
UChicago News, August 01, 2016
Experience in trading changes how the human brain evaluates the sale of goods, muting a well-established economic bias known as the endowment effect, according to researchers at the University of Chicago.
The findings, to be published this week in the Proceedings of the National Academy of Sciences, come from a set of experiments on why traders are less susceptible to the effect—a phenomenon in which people demand a higher price to sell a good than they’re willing to pay for it. Such behavior contradicts standard economic theory, distorting prices and reducing market activity.