Does the Endowment Effect Influence Outcomes in Takings Cases? An Exploratory Look at Some Important Cases and Suggestions for Additional Research

Abstract

The endowment effect predicts that people value losses more than gains. I examine whether the effect sheds light on courts’ takings decisions. My findings include the following: (1) regulations that emphasize losses rather than gains are more likely to survive judicial review; (2) endowments can include comprehensive plans, development plans, permits, etc; (3) both governments and landowners can acquire endowments to sway courts in their favor; (4) occupying land creates a strong endowment; and (5) implementing plans helps to cement endowments. I suggest research that examines more cases, hypotheses that emerge from my analyses, and characteristics of the effect related to land.