Bridging the WTA-WTP Gap: Ownership, Bargaining, and the Endowment Effect

Coren, Amy Elizabeth

doi:10.2139/ssrn.1632613

Cited by 3 publications

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“…Non-owners received a cash payment, and owners received a set of 49 Others have constructed theories that stand as alternatives to endowment theory and hinge on the psychological relationship between individuals and their possessions. Coren (2007) summarized the literature that develops and tests these sorts of theories. Evidence exists to support these theories, which are built on assumptions such as emotional attachment to possessions as alternatives to loss aversion.…”

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“…Loewenstein and Kahneman (1991), for example, pointed out findings from Kahneman et al (1991) that suggested that pen owners were no more likely than non-pen-owners to rate pens highly on an attractiveness scale. In addition, the "instantaneous" nature of gaps seems to work against attachment theory, at least if it assumes that attachment requires some time to develop (Kahneman et al 1990(Kahneman et al , p. 1342; but see Coren 2007, who suggested that attachment might occur instantly).…”

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What explains observed reluctance to trade? A comprehensive literature review

Zeiler

2018

Research Handbook on Behavioral Law and Economics

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for valuable comments and suggestions. 1 Valuation gaps and exchange asymmetries are often referred to as "endowment effects." The name is confusing when it comes to the cause of gaps and asymmetries because it implies that endowment is the cause. For this reason, some have adopted less theory-suggestive names for the observed phenomena (e.g., Plott and Zeiler 2005, 2007). I use "valuation gap" and "exchange asymmetry" throughout depending on the context in which the phenomenon is observed. I use "reluctance to trade" to refer to the general phenomenon. 2 See also, Biel et al. (2011) ("At present, there is no sign of an approaching consensus. . .") and Lunn and Lunn (2014) ("There remains no agreed explanation for the finding that experimental subjects and survey respondents generally set a minimum selling price for an item that is two or more times higher than the maximum those without the same item will pay to acquire it").

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What explains observed reluctance to trade? A comprehensive literature review

Zeiler

2018

Research Handbook on Behavioral Law and Economics

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Against Endowment Theory: Experimental Economics and Legal Scholarship

Klass

Zeiler

2013

SSRN Journal

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Endowment theory holds the mere ownership of a thing causes people to assign greater value to it than they otherwise would. The theory entered legal scholarship in the early 1990s and quickly eclipsed other accounts of how ownership affects valuation. Today, one finds appeals to a generic "endowment effect" throughout the legal literature. Recent experimental results, however, suggest that the empirical evidence for endowment theory is weak at best. When the procedures used in laboratory experiments are altered to rule out alternative explanations, the "endowment effect" disappears. This and other recent evidence suggest that mere ownership does not affect willingness to trade or exchange. Many experimental economists no longer ascribe to endowment theory. Legal scholars, however, continue to rely on endowment theory to predict legal entitlements' probable effects on expressed valuations. That reliance is no longer warranted. Endowment theory's influence in legal scholarship provides important lessons about how legal scholars and policymakers should, and should not, use results from experimental economics.

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What Explains Observed Reluctance to Trade? A Comprehensive Literature Review

Zeiler¹

2016

SSRN Journal

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Bridging the WTA-WTP Gap: Ownership, Bargaining, and the Endowment Effect

Cited by 3 publications

References 40 publications

What explains observed reluctance to trade? A comprehensive literature review

What explains observed reluctance to trade? A comprehensive literature review

Against Endowment Theory: Experimental Economics and Legal Scholarship

What Explains Observed Reluctance to Trade? A Comprehensive Literature Review

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