The endowment effect was controversial for years. The idea that a squishy, irrational bit of human behaviour could affect the cold, clean and rational world of

The endowment effect was controversial for years. The idea that a squishy, irrational bit of human behaviour could affect the cold, clean and rational world of markets was a challenge to neoclassical economists. Their assumption had always been that individuals act to maximise their welfare (the defining characteristic of economic man, or Homo economicus). I see this kind of thing over and over again, but I don't believe it. What I don't believe is that anyone really ever thought that Homo Economicus was really the way that humans behave, rather than a massive simplification of the spherical-cow variety aimed at making economics tractable. To a first approximation, people will act to maximise their own benefit. To a second approximation, they're blithering idiots.