Why The Sun Will Not Set On The Endowment Effect: The Endowment Effect After Loss Aversion

The endowment effect has had a profound influence on decision-making research, most notably as the lynchpin phenomenological evidence for loss aversion. However, both loss aversion and the interpretation of the endowment effect in terms of loss aversion have recently been called into question. Instead, recent research has argued that many instances in which the endowment effect has been attributed to loss aversion can be better explained by a tendency to favor omission over commission. This interpretation has implications for promoting change at the level of the individual and of the institution; in particular, it suggests that change can be promoted through framing omissions as acts of commission and through the use of sunset provisions.