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

Author

Listed:
  • 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.

Suggested Citation

  • M. Keith Chen & Venkat Lakshminarayanan & Laurie Santos, 2005. "The Evolution of Our Preferences: Evidence from Capuchin-Monkey Trading Behavior," Cowles Foundation Discussion Papers 1524, Cowles Foundation for Research in Economics, Yale University.
  • Handle: RePEc:cwl:cwldpp:1524
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    File URL: http://cowles.yale.edu/sites/default/files/files/pub/d15/d1524.pdf
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    References listed on IDEAS

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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 15:38:20
    2. How to save capitalism
      by chris dillow in Stumbling and Mumbling on 2008-10-07 15:59:35

    Citations

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    Cited by:

    1. 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.
    2. 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).
    3. 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.
    4. 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.
    5. 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).
    6. Ariel Rubinstein, 2005. "Discussion of 'BEHAVIORAL ECONOMICS'," Levine's Bibliography 784828000000000539, UCLA Department of Economics.

    More about this item

    Keywords

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

    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, Pricing, and Design - - - Value Theory
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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