Preschoolers and the Endowment Effect

Abstract

We show that preschoolers exhibit the endowment effect as evidenced by experiments where children generally chose to keep their own toys rather than trading them for similar ones. Furthermore, we relate the emergence of this effect to children's innate psychobiological traits--emotional state, gender, handedness, and digit ratio. The trials were conducted with 141 children across 6 kindergartens. We also found support that children, like adults, exhibit a preference for physical possession as opposed to ownership. As with adults, emotions also seem to matter, as children who were described as quiet and calm were more likely to present the endowment effect. Also of note, right-handed children described as quiet were more likely to exhibit the phenomenon. Furthermore, female children were generally found to be calmer than males, while males tended to be more fearful than females. This result was also previously found in teenagers.

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