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dc.contributor.advisorBelot, Michele
dc.contributor.advisorSanchez-Pages, Santiago
dc.contributor.authorArnokourou, Athanasia
dc.date.accessioned2018-01-25T16:06:35Z
dc.date.available2018-01-25T16:06:35Z
dc.date.issued2016-06-25
dc.identifier.urihttp://hdl.handle.net/1842/26049
dc.description.abstractThis thesis provides a detailed analysis of the so-called `house money' or windfall endowment effect and its main determinants. Chapter 1 provides a detailed survey on the literature related to the house money effect. This effect according to Thaler and Johnson (1990) - refers to the situation where prior gains mitigate the influence of loss aversion and facilitate risk-seeking. The concept borrows its name from the expression employed in the gambling parlance of "playing with the house money", which is used when people gamble while ahead. As the literature has used a variety of concepts and ideas to describe the house money effect, this chapter presents and discusses them within the environment and the related literature that they have emerged. This is done in order to highlight the predominant answers to the main research questions raised in the various strands of the literature, namely: (i) whether people treat money differently depending on its origin; and (ii) the implications of the house money effect for the experimental methodology in economics. The literature is organised and presented according to the context in which the above two research questions have been examined. By presenting results in each particular context, we pin down the contextual differences that might be responsible for the presence (or absence) of the house money effect, and lay the initial ground work to answer a third research question: What drives the house money effect? In this regard, after we demonstrate the context-dependency of the house money effect we present the two main interpretations that it has received, namely that the house money effect is a result of different mental accounting over windfall gains (`windfall effect') or a result of fairness or deservingness concerns ('Lockean desert effect'). Chapter 2 re-examines the house money effect and explores its main driving forces. For that, we employ a novel experimental design utilising a within-subject approach, coupled with the use of three different contexts of economic decisions (a trust game, a set of lotteries and a public good game). Both the within-subject experimental design and the three contexts of economic decisions allow us to better test the two main interpretations of the house money effect. Our experimental data confirm the presence of the house money effect both in the decision to trust (but not in the decision of trustworthiness) in the trust game and in the decision to contribute in the public account of the public good game. However, our findings do not support the hypothesis that changes in risk behaviour of participants are due to different sources of money, suggesting that risk attitudes are robust and independent of the origin of money along the experiment. Therefore, our findings seem to favour interpretations of the house money effect as a result of 'just desert' or fairness preferences rather than the result of different mental accounting over windfall gains. Chapter 3 combines two branches of experimental literature, namely the house money effect and the literature on individual differences in social preferences. Both the house money effect and individual differences have been used extensively to explain cooperation in social dilemmas (and its decline over time). Here, we test the implications of house money on reciprocal behaviour, that is, whether participants in economic experiments are less likely to reciprocate when earned money rather than windfall money is at stake. Using the innovative experimental design of Fischbacher et al. (2001) with strategy method, we classify participants according to their behaviour in a linear public good game, and by adding the within-subject element in our experimental design we test the robustness of this classification across the different origin of endowments. Our results indicate that the types' classification is robust across the origin of money. Contrary to Harrison (2007), we find that participants' decision to free ride or not (contribute or not) is independent of the origin of money, but given that the decision to contribute has been made, contribution levels may vary -actually be lower- when money is earned rather than windfall endowed. We also elicit beliefs about others' contributions and test how these beliefs affected by the "house money" and in turn how they affect the decision to contribute. This discussion relates to what the literature has characterised so far as "anticipatory reciprocity".en
dc.contributor.sponsorotheren
dc.language.isoenen
dc.publisherThe University of Edinburghen
dc.subjectwindfall endowment effecten
dc.subjecthouse moneyen
dc.subjectcontextual differencesen
dc.subjectcontext-dependencyen
dc.subjectLockean desert effecten
dc.subjectanticipatory reciprocityen
dc.titleEssays on the house money effecten
dc.typeThesis or Dissertationen
dc.type.qualificationlevelDoctoralen
dc.type.qualificationnamePhD Doctor of Philosophyen


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