Physiological Anticipation and Endowment Effects: Inferred Brain Function in the Formation of Allocations in an English Auction

  • John Dickhaut
  • Kip C. S. Smith
  • Kevin McCabe
  • Nicole R. Peck
  • Vijay Rajan


Among economic theorists, proving the existence of a competitive general equilibrium and then evaluating the equilibrium allocation of goods and services has been a major endeavor. The pile of papers on existence and attributes of the general equilibrium is Everest-like, while comparatively, the pile of papers on getting to equilibrium is like a ski-slope in Florida. Some of the papers in the smaller pile are motivated by the desire to avoid the problems of employing the mythical archetypal Walrasian auctioneer (see Hahn, 1988). That desire, while understood, requires the difficult activity of speci-fying the price-setting process and determining if that process leads to equilibrium. We consider an alternative premise: that using electrocardiograms to infer brain function of players in an English Auction yields a more complete sketch of how a simple economy gets to equilibrium. We make this proposal fully aware that this attempt is a small first step in discovering the processes employed in getting to equilibrium in more complicated institutions.


Cognitive Effort Autonomic Nervous System Activity Double Auction Endowment Effect Target Emotion 
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Copyright information

© Springer Science+Business Media New York 2002

Authors and Affiliations

  • John Dickhaut
    • 1
  • Kip C. S. Smith
    • 2
  • Kevin McCabe
    • 3
  • Nicole R. Peck
    • 2
  • Vijay Rajan
    • 1
  1. 1.University of MinnesotaUSA
  2. 2.Kansas State UniversityUSA
  3. 3.George Mason UniversityUSA

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