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The Evolution of Our Preferences: Evidence from Capuchin-Monkey Trading Behavior

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Author Info

  • M. Keith Chen

    ()
    (School of Management, Yale University)

  • Venkat Lakshminarayanan
  • Laurie Santos

Abstract

Behavioral 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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File URL: http://cowles.econ.yale.edu/P/cd/d15a/d1524.pdf
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Bibliographic Info

Paper provided by Cowles Foundation for Research in Economics, Yale University in its series Cowles Foundation Discussion Papers with number 1524.

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Length: 26 pages
Date of creation: Jun 2005
Date of revision:
Publication status: Published in Journal of Political Economy (2006), 114(3): 517-537
Handle: RePEc:cwl:cwldpp:1524

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Phone: (203) 432-3702
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Postal: Cowles Foundation, Yale University, Box 208281, New Haven, CT 06520-8281 USA

Related research

Keywords: Prospect theory; Loss aversion; Reference dependence; Evolution; Neuroeconomics; Capuchin monkeys; Monkey business;

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Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Humans and incentives
    by chris dillow in Stumbling and Mumbling on 2011-08-24 10:38:20
  2. How to save capitalism
    by chris dillow in Stumbling and Mumbling on 2008-10-07 10:59:35
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Cited by:
  1. Götte, Lorenz & Huffman, David B., 2006. "Incentives and the Allocation of Effort Over Time: The Joint Role of Affective and Cognitive Decision Making," IZA Discussion Papers 2400, Institute for the Study of Labor (IZA).
  2. Teck H. Ho & Noah Lim & Colin Camerer, 2005. "Modeling the Psychology of Consumer and Firm Behavior with Behavioral Economics," Levine's Bibliography 784828000000000476, UCLA Department of Economics.
  3. Nava Ashraf & Colin F. Camerer & George Loewenstein, 2005. "Adam Smith, Behavioral Economist," Journal of Economic Perspectives, American Economic Association, vol. 19(3), pages 131-145, Summer.
  4. Ariel Rubinstein, 2005. "Discussion of 'BEHAVIORAL ECONOMICS'," Levine's Bibliography 784828000000000539, UCLA Department of Economics.
  5. Götte, Lorenz & Huffman, David B., 2005. "Affect as a Source of Motivation in the Workplace: A New Model of Labor Supply, and New Field Evidence on Income Targeting and the Goal Gradient," IZA Discussion Papers 1890, Institute for the Study of Labor (IZA).
  6. Delphine Van Hoorebeke, 2013. "Une vision de la prise de décision rationnelle et irrationnelle, un construit individuel et collectif," CIRANO Working Papers 2013s-13, CIRANO.

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