How the Custom Suppresses the Endowment Effect: Exchange Paradigm in Kanak Country.

Jean Baratgin,Patrice Godin,Frank Jamet

doi:10.3389/fpsyg.2021.785721

Abstract

In this paper, Knetsch's exchange paradigm is analyzed from the perspective of pragmatics and social norms. In this paradigm the participant, at the beginning of the experiment, receives an object from the experimenter and at the end, the same experimenter offers to exchange the received object for an equivalent object. The observed refusal to exchange is called the endowment effect. We argue that this effect comes from an implicature made by the participant about the experimenter's own expectations. The participant perceives the received item as a gift, or as a present, from the experimenter that cannot be exchanged as stipulated by the social norms of western politeness common to both the experimenter and the participant. This implicature, however, should not be produced by participants from Kanak culture for whom the perceived gift of a good will be interpreted as a first act of exchange based on gift and counter-gift. This exchange is a natural, frequent, balanced, and indispensable act for all Kanak social bonds whether private or public. Kanak people also know the French social norms that they apply in their interactions with French people living in New Caledonia. In our experiment, we show that when the exchange paradigm takes place in a French context, with a French experimenter and in French, the Kanak participant is subject to the endowment effect in the same way as a French participant. On the other hand, when the paradigm is carried out in a Kanak context, with a Kanak experimenter and in the vernacular language, or in a Kanak context that approaches the ceremonial of the custom, the endowment effect is no longer observed. The same number of Kanak participants accept or refuse to exchange the endowed item. These results, in addition to providing a new explanation for the endowment effect, highlight the great flexibility of decisions according to social-cultural context.

Highlights

For more than 40 years, numerous studies have shown that people seem to value a good they possess more than an equivalent good they do not possess
We found a strong endowment effect in the with French participants from metropolitan France (WCF) condition which matched the classical results of the standard of Knetsch (1989)
Kanak participants are subject to the endowment effect only when the context of the experiment involves interaction with a French experimenter and in a communication made in French (WCK)

Summary

Introduction

For more than 40 years, numerous studies have shown that people seem to value a good they possess more than an equivalent good they do not possess This endowment effect (Thaler, 1980) is observed in particular in the economic and psychological literature through the Exchange Paradigm ( on designated as EP). The endowment effect is reflected in a refusal to exchange the received good This refusal to exchange is observed in young children (Harbaugh et al, 2001; Horowitz and McConnell, 2002; Lucas et al, 2008; Da Silva et al, 2014) and in certain nonhuman primates (Lakshminaryanan et al, 2008; Kanngiesser et al, 2011; Brosnan et al, 2012; Flemming et al, 2012, to cite a few). The endowment effect reflects this “exchange asymmetry” (Plott and Zeiler, 2007; Marzilli Ericson and Fuster, 2014) in favor of the given good

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Conclusion