A STUDY OF ENDOWMENT EFFECT IN CONSTRUCTION PROJECT DISPUTE RESOLUTION

摘要

It has been reported that the average dispute value (the additional entitlement included in the contract to resolve disputes) was US $84 million and average length of dispute (the period between the time a dispute is formalized and it is settled) was 14.6 months in Asia in the year of 2016 (Arcadis Global Construction Dispute Report 2017). These figures are not impressive in terms of the non-productive use of valuable resources. Endowment effect (EE), which was firstly coined by 2017 Nobel laureate in economics science professor Richard Thaler, is a behavioral phenomenon that people attribute more value to the things they own. EE would derail making rational decisions. This study explores the application of EE on disputants' behavior in construction project dispute resolution (CPDR). In this regard, four sources of EE in CPDR were identified. These are i) ownership, ii) loss aversion, iii) status quo bias and iv) bargaining habit.