By extending a typical endowment effect experiment with the possibility of winning the endowment in a real effort contest, we found two reinforcing effects that led to a complete market failure. Subjects who won the item in the effortful competition had a very high willingness to accept (trophy winner effect). By contrast, subjects who were not successful had an extremely low willingness to pay for the same item (trophy loser effect). We disentangle different components of these effects and investigate the underlying emotional responses. Further, we analyze the duration of the effects and discuss economic implications.
We conduct a bibliometric analysis and review the literature of the last six decades on ambiguity aversion. Comparing trends in theoretical, experimental, and empirical contributions, our study presents the main aspects that are discussed in this literature. We show the increasing relevance of ambiguity aversion for decision-making research and discuss factors influencing attitudes on ambiguity. Our literature review reveals unsolved problems in the research on ambiguity and gives an outlook on new ventures for future research.
scite is a Brooklyn-based organization that helps researchers better discover and understand research articles through Smart Citations–citations that display the context of the citation and describe whether the article provides supporting or contrasting evidence. scite is used by students and researchers from around the world and is funded in part by the National Science Foundation and the National Institute on Drug Abuse of the National Institutes of Health.