Publication Date: June 2005
Behavioral economics has demonstrated systematic decision-making biases in both lab and ﬁeld data. But are these biases learned or innate? We investigate this question using experiments on a novel set of subjects — capuchin monkeys. By introducing a ﬁat currency and trade to a capuchin colony, we are able to recover their preferences over a wide range of goods and risky choices. We show that standard price theory does a remarkably good job of describing capuchin purchasing behavior; capuchin monkeys react rationally to both price and wealth shocks. However, when capuchins are faced with more complex choices including risky gambles, they display many of the hallmark biases of human behavior, including reference-dependent choices and loss-aversion. Given that capuchins demonstrate little to no social learning and lack experience with abstract gambles, these results suggest that certain biases such as loss-aversion are an innate function of how our brains code experiences, rather than learned behavior or the result of misapplied heuristics.
Prospect theory, Loss aversion, Reference dependence, Evolution, Neuroeconomics, Capuchin monkeys, Monkey business
JEL Classification Codes: C91, C99, D12, D46, D80, D81
Published in Journal of Political Economy (June 2006), 114(3): 517-537 [JSTOR]