Many have advanced observed exchange asymmetries as support for endowment effect theory and underlying prospect theory. These are very general theories about the nature of preferences, which, if accepted, have implications for applied economics in complex field settings. While we do challenge...

Systematic asymmetries in exchange behavior have been widely interpreted as support for endowment effect theory, an application of prospect theory positing that loss aversion associated with ownership explains observed exchange asymmetries. We offer an alternative explanation. Specifically, we...

Exchange economies were created in which individuals faced losses. If people are risk seeking in the losses, as predicted by prospect theory, then due to the nonconvexity, the competitive equilibria are all on the boundaries of the Edgeworth Box. The experimental results are that risk-seeking...