The EconPapers Reddit pointed us to an awesome behavioural finance paper by M. Keith Chen, Venkat Lakshminarayanan and Laurie R. Santos that seeks to understand if behavioural biases are innate, by introducing currency and trading to Capuchin monkeys.
This is a picture and description from the paper of how the trials were conducted:
The first set of experiments had the monkeys spend a budget of tokens across a range of possible food choices. The monkeys responded rationally to price and wealth shocks, changing their behaviour in a manner similar to humans.
A second set of three experiments presented the monkeys with “gambles”, situations in which an amount of apple was presented, but a different amount of food could eventually be awarded.
When offered the same 50-50 gamble presented as a bonus (a second piece of apple might be awarded) or a loss (two pieces were presented, but one might be taken away), the capuchins robustly preferred the bonus.
That behaviour was further tested in an experiment where one piece of apple was always awarded, but one experimenter offered two and the other the correct one piece. The side offering two pieces always removed the second piece apple in front of the capuchin. The monkeys preferred the experimenter who always presented and awarded one piece.
The behaviour the monkeys are exhibiting is loss-aversion, and it is a behavioural bias is exhibited by human traders to this day. Seeing it in one of our genetic predecessors shows that it may be ingrained in the human psyche.
Read the full paper here.
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