Given the pervasive evidence that people typically value changes in terms of comparisons to a reference state, and that they commonly value losses and reductions of losses more than gains, current risk assessment and valuation practice is likely to lead to systematic bias and distorted guidance....

A wine-loving economist we know purchased some nice Bordeaux wines years ago at low prices. The wines have greatly appreciated in value, so that a bottle that cost only $10 when purchased would now fetch $200 at auction. This economist now drinks some of this wine occasionally, but would neither...

Available methods of valuing environmental changes are often limited in their applicability to current issues such as damage assessment and implementing regulatory controls, or may otherwise not provide reliable readings of community preferences. An alternative is to base decisions on...

People's common propensity to value losses more than otherwise commensurate gains, gives rise to different values of positive and negative changes in entitlements depending on the measure used to assess them. A major implication of the differing valuations is a need to choose an appropriate...

Recent reports suggest that the "endowment effect" may be due to conditions under which it is observed and explained by incentives long recognized in standard theory. Evidence from new experiments, reported here, provides empirical support for the role of the economic environment on people's...