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Endowment Effect

"This pattern—the fact that people often demand much more to give up an object than they would be willing to pay to acquire it—is called the endowment effect (Thaler, 1980)."
Thaler (1992) [book]

"The endowment effect is a hypothesis that people value a good more once their property right to it has been established. In other words, people place a higher value on objects they own relative to objects they do not. In one experiment, people demanded a higher price for a coffee mug that had been given to them but put a lower price on one they did not yet own. The endowment effect was described as inconsistent with standard economic theory which asserts that a person's willingness to pay (WTP) for a good should be equal to their willingness to accept (WTA) compensation to be deprived of the good. This hypothesis underlies consumer theory and indifference curves."
Wikipedia (2006)

"Thaler (1980) coined the term “endowment effect” to refer to the finding that randomly assigned owners of an object appear to value the object more than randomly assigned non-owners of the object. For instance, in one well-known series of endowment effect experiments, Kahneman, Knetsch and Thaler (1990) found that randomly assigned owners of a mug required significantly more money to part with their possession (around $7) than randomly assigned buyers were willing to pay to acquire it (around $3). Kahneman et al. (1990, 1991) and Tversky and Kahneman (1991) attributed this result to loss aversion: owners’ loss of the mug loomed larger than buyers’ gain of the mug."

"The endowment effect (Thaler 1980), also known as “status quo bias” (Samuelson and Zeckhauser 1988), is the phenomenon in which most people would demand a considerably higher price for a product that they own than they would be prepared to pay for it (Weber 1993)."
Goldberg and von Nitzsch (1999), page 99

Top 10 Papers

  1. KAHNEMAN, D., J.L. KNETSCH and R.H. THALER, 1990. Experimental Tests of the Endowment Effect and the Coase Theorem. The Journal of Political Economy. [Cited by 688] (39.90/year)
  2. KAHNEMAN, D., J.L. KNETSCH and R.H. THALER, 1991. Anomalies: The Endowment Effect, Loss Aversion, and Status Quo Bias. The Journal of Economic Perspectives. [Cited by 506] (31.15/year)
  3. KNETSCH, J.L., 1989. The Endowment Effect and Evidence of Nonreversible Indifference Curves. The American Economic Review. [Cited by 208] (11.40/year)
  4. VAN, L., D. DUNNING and G. LOEWENSTEIN, 2000. Egocentric empathy gaps between owners and buyers: misperceptions of the endowment effect.. J Pers Soc Psychol. [Cited by 63] (8.70/year)
  5. PLOTT, C.R. and K. ZEILER, 2005. … Willingness to Pay/Willingness to Accept Gap, the ‘Endowment Effect,'Subject Misconceptions and …. American Economic Review. [Cited by 57] (25.42/year)
  6. KNETSCH, J.L., F.F. TANG and R.H. THALER, 2001. The endowment effect and repeated market trials: Is the Vickrey auction demand revealing?. Experimental Economics. [Cited by 41] (6.57/year)
  7. FRANCIOSI, R., et al., 1996. Experimental tests of the endowment effect. Journal of Economic Behavior and Organization. [Cited by 40] (3.56/year)
  8. HUCK, S., et al., 1997. Learning to Like what You Have:: Explaining the Endowment Effect. res.org.uk. [Cited by 37] (3.61/year)
  9. MORRISON, G.C., 1998. Understanding the disparity between WTP and WTA: endowment effect, substitutability, or imprecise …. Economics Letters. [Cited by 25] (2.71/year)
  10. VAN, E. and D. VAN, 1996. Buying and selling exchange goods: Loss aversion and the endowment effect. Journal of Economic Psychology. [Cited by 23] (2.05/year)

Bibliography