This is a

is CBS, I in the world. I'm John Bachelor. I welcome Professor Richard Epstein,

a senior fellow for the Hoover Institution, he teaches law at NYU in the University of Chicago.

And in an essay published at Defining Ideas, a tribute to the passing of Daniel Kahneman, a Nobel Prize winner in Economic Sciences in the 21st century,

and other tributes and awards from all manner of distinguished institutions. I read, however, that it comes to me to understand

some of the work Professor Kahneman left behind him, and the one that I'm most like is called the endowment effect, the endowment

effect.

Richard, a very good evening to you if I understand it.

If I have a coffee cup that I've purchased for five dollars that it is within my

Psychology my temperament when I go to sell it, I will have a different price because I have possessed

it?

Do I understand the endowment effect?

Well, it's half of it, you don't have to purchase it. You just have to have it.

And one of the reasons why it's such a stunning finding for most people that the willingness

to accept, right? The WTA as opposed to the willingness to pay turn out to be different

is you can't figure out any reason why it is that that should be so. If somebody

were to tell you in the simplest firms that the reason I have a lot of affection for this ring is it's the one I got married with everybody understands a subjective attachment and indeed most of the work on market economies have the following

proposition where this objective value of goods. It means that the owner values

them more than the rest of the world and so the owner is not going to put them up for sale.

May occasionally sell it if somebody gives a ridiculous offer

coming out of the blue,

but usually subjective preferences are stable.

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