Wednesday, April 9, 2008

Jones and Brosnan on Law, Biology, and Property

Owen D. Jones (Vanderbilt) and Sarah F. Brosnan (Georgia State) have posted Law, Biology, and Property: A New Theory of the Endowment Effect on SSRN.  Here's the abstract:

Recent work at the intersection of law and behavioral biology has suggested numerous contexts in which legal thinking could benefit by integrating knowledge from behavioral biology. In one of those contexts, behavioral biology may help to provide theoretical foundation for, and potentially increased predictive power concerning, various psychological traits relevant to law. This Article describes an experiment that explores that context.

The paradoxical psychological bias known as the endowment effect puzzles economists, skews market behavior, impedes efficient exchange of goods and rights, and thereby poses important problems for law. Although the effect is known to vary widely, there are at present no satisfying explanations for why it manifests when and how it does. Drawing on evolutionary biology, this Article provides a new theory of the endowment effect. Briefly, we hypothesize that the endowment effect is an evolved propensity of humans and, further, that the degree to which an item is evolutionarily relevant will affect the strength of the endowment effect. The theory generates a novel combination of three predictions. These are: (1) the effect is likely to be observable in many other species, including close primate relatives; (2) the prevalence of the effect in other species is likely to vary across items; and (3) the prevalence of the endowment effect will increase or decrease, respectively, with the increasing or decreasing evolutionary salience of the item in question.

The authors tested these predictions in a chimpanzee (Pan troglodytes) experiment, recently published in Current Biology. The data, further explored here, are consistent with each of the three predictions. Consequently, this theory may explain why the endowment effect exists in humans and other species. It may also help both to predict and to explain some of the variability in the effect when it does manifest. And, more broadly, the results of the experiment suggest that combining life science and social science perspectives could lead to a more coherent framework for understanding the wider variety of other cognitive heuristics and biases relevant to law.

Ben Barros

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Putting aside the urge for the moment to make some quip regarding personal observations of the endowment effect (for instance, mostly seen in southern California and in the adult film industry)...

I think the legal community isn't about to tread near applying certain principles of behavioral biology to the law. The last time "the law" tried doing something like that was using simple concrete statistics to identify drug couriers on major US highways. The usual suspects then cried "PROFILING!!"

Can you say "phrenology?"

The only "biology" law seems to entertain is DNA data.

I must admit I get really uneasy when legal experts sit down with scientists (social or other). The resulting output of chaotic neural dysfunction boggles the mind (see Inter-governmental Panel on Climate Change and the environmental lawyers).

Posted by: Sam Gompers | Apr 10, 2008 6:53:10 AM

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