In this paper, we consider trading with proportional transaction costs as in Schachermayer’s paper of 2004. We give a necessary and sufficient condition for A, the cone of claims attainable from zero endowment, to be closed. Then we show how to define a revised set of trading prices in such a way that firstly, the corresponding cone of claims attainable for zero endowment, Ã, does obey the Fund...

We explore the impact of reference dependence on trade in dynamic economies, both theoretically and experimentally. We first show that under plausible axioms, dynamic economies generate a momentum effect capable of reducing or eliminating the initial trade-dampening impact of the endowment effect over time. We then introduce a novel experiment designed to test this prediction. Our results confi...

The factor endowment constitutes the basis for nations’ wealth. Researches on international trade theory also rely on a whole set of multi-factor endowment data collected in different countries. In view of the above mentioned facts, based on its attributes, the factors of production are classified into three categories as consumptive, idle and accumulative in the present paper. Then, supported ...

In this note we study von Neumann-Morgenstern farsightedly stable sets for Shapley and Scarf (1974) housing markets. Kawasaki (2008) shows that the set of competitive allocations coincides with the unique von Neumann-Morgenstern stable set based on a farsighted version of antisymmetric weak dominance (cf., Wako, 1999). We demonstrate that the set of competitive allocations also coincides with t...

We study pure exchange economies with symmetries on preferences up to taste intensity transformations. In a 2-person, 2-good endowment economy, we show that bilateral symmetry on each utility functional precludes a rectangle in the Edgeworth box as the location of Pareto optimal allocations. Under strictly quasi-concave preferences, a larger set can be ruled out. The inadmissible region is stil...

Preferences and endowments. Consider a static endowment economy populated by a continuum of households. The households have identical preferences expressed by a strictly increasing strictly concave utility function U(c) over a single consumption good. The households have heterogeneous endowments y ∈ [0,∞) of this single consumption good distributed with density f(y) > 0 in the population. Let Y...

We formulate and study the requirement on an allocation rule that no agent should be able to benefit by augmenting his endowment through borrowing resources from the outside world (alternatively, by simply exaggerating it). We show that the Walrasian rule is not “borrowing-proof” even on standard domains. More seriously, no efficient selection from the endowments-lower-bound correspondence, or ...

Participatory budgeting is applied by an increasing number of municipalities and organizations. Citizens can decide over an institutional budget. The allocation mechanism can affect emotional arousal, which influences the choice evaluation in the decicion-making process. Building on the endowment effect, we conduct an experiment testing a novel participatory budgeting approach that includes an ...

This study examines individual behavior in two well-functioning marketplaces to investigate whether market experience eliminates the endowment effect. Field evidence from both markets suggests that individual behavior converges to the neoclassical prediction as market experience increases. In an experimental test of whether these observations are due to treatment (market experience) or selectio...