

The endowment effect: It’s mine, I tell you - rglullis
http://www.economist.com/science/displaystory.cfm?story_id=11579107&fsrc=RSS

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hugh
_The endowment effect was controversial for years. The idea that a squishy,
irrational bit of human behaviour could affect the cold, clean and rational
world of markets was a challenge to neoclassical economists. Their assumption
had always been that individuals act to maximise their welfare (the defining
characteristic of economic man, or Homo economicus)._

I see this kind of thing over and over again, but I don't believe it.

What I don't believe is that anyone really ever thought that Homo Economicus
was _really_ the way that humans behave, rather than a massive simplification
of the spherical-cow variety aimed at making economics tractable.

To a first approximation, people will act to maximise their own benefit. To a
second approximation, they're blithering idiots.

