The Evolution of Our Preferences: Evidence from Capuchin-Monkey Trading Behavior
AbstractBehavioral economics has demonstrated systematic decision-making biases in both lab and field data. But are these biases learned or innate? We investigate this question using experiments on a novel set of subjects — capuchin monkeys. By introducing a fiat currency and trade to a capuchin colony, we are able to recover their preferences over a wide range of goods and risky choices. We show that standard price theory does a remarkably good job of describing capuchin purchasing behavior; capuchin monkeys react rationally to both price and wealth shocks. However, when capuchins are faced with more complex choices including risky gambles, they display many of the hallmark biases of human behavior, including reference-dependent choices and loss-aversion. Given that capuchins demonstrate little to no social learning and lack experience with abstract gambles, these results suggest that certain biases such as loss-aversion are an innate function of how our brains code experiences, rather than learned behavior or the result of misapplied heuristics.
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Bibliographic InfoPaper provided by Cowles Foundation for Research in Economics, Yale University in its series Cowles Foundation Discussion Papers with number 1524.
Length: 26 pages
Date of creation: Jun 2005
Date of revision:
Publication status: Published in Journal of Political Economy (2006), 114(3): 517-537
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Postal: Yale University, Box 208281, New Haven, CT 06520-8281 USA
Phone: (203) 432-3702
Fax: (203) 432-6167
Web page: http://cowles.econ.yale.edu/
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Postal: Cowles Foundation, Yale University, Box 208281, New Haven, CT 06520-8281 USA
Find related papers by JEL classification:
- C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
- C99 - Mathematical and Quantitative Methods - - Design of Experiments - - - Other
- D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
- D46 - Microeconomics - - Market Structure and Pricing - - - Value Theory
- D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-06-27 (All new papers)
- NEP-EVO-2005-06-27 (Evolutionary Economics)
- NEP-EXP-2005-06-27 (Experimental Economics)
- NEP-HPE-2005-06-27 (History & Philosophy of Economics)
- NEP-PKE-2005-06-27 (Post Keynesian Economics)
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