Mementos and the endowment effect

Chu, Charlene K.; Shu, Suzanne B.

doi:10.1002/bdm.2295

Cited by 6 publications

(7 citation statements)

References 34 publications

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“…The hypothetical test further showed if willingness to accept was significantly higher than willingness to pay. Endowment was defined as a scenario where the willingness to accept is significantly higher than the willingness to pay (Chu & Shu, 2023;Morewedge & Giblin, 2015;Smitizsky et al, 2021). Rejecting the null hypothesis implies that there is a significant difference between buyers' and sellers' valuations and willingness to accept is significantly higher than willingness to pay, concluding that the endowment effect is present in the housing market.…”

Section: Methodsmentioning

confidence: 99%

“…The concept was further explored by Knetsch and Sinden (1984), who defined it as a state in which the willingness to accept significantly exceeds the willingness to pay for an identical commodity. As of then, the existence of the WTA and WTP gap has sparked a lot of debate in different fields of study, such as the retail sector (Wang, 2009), business investment decisions (Peñón & Ortega, 2018), politics (Alesina et al, 2015), management (Harcourt et al, 2020;Ştir & Zaiţ, 2022), social psychology (Chu & Shu, 2023;Smitizsky et al, 2021;Yamamoto & Navarro-Martinez, 2022), environment (Dietz & Venmans, 2019;Villanueva & Gómez-Limón, 2023) and the real estate sector (Gong et al, 2019;He & Asami, 2014;Paraschiv & Chenavaz, 2011;Yan et al, 2021). The application of the endowment effect to the real estate sector got the attention of scholars due to valuation inconsistencies, where buyers and sellers do not value properties to the same market price (Gong et al, 2019;Paraschiv & Chenavaz, 2011).…”

Section: Introductionmentioning

confidence: 99%

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Endowment Effect, Information Asymmetry, and Real Estate Market Decisions: Willingness to Pay and Willingness to Accept Disparities

Mwanyepedza,

Mishi

2024

Real Estate Management and Valuation

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The endowment effect has gained dominance over the decades due to its ability to explain behavioral instincts portrayed by individuals when making decisions and its inconsistency with standard economic theories. It has been extensively applied in different fields of study, however its applicability to the housing market has been limited since its establishment. The study seeks to investigate whether the endowment effect exists in the housing market and whether the disclosure of information, increased affordability and agent evaluation significantly reduce the endowment effect. Using data obtained from a survey conducted between January and August 2022 in the Eastern Cape Province of South Africa, the study found that the disclosure of information eliminates the gap between buyers’ valuations and market values, while the gap between sellers’ valuations and market prices is reduced but not eliminated by information disclosure. The study has further concluded that increased affordability and agent evaluations significantly reduce the endowment effect in the housing market. Therefore, the study recommends that private and public entities should establish laws and regulations which promote the disclosure of information to reduce the gap between the willingness to pay (WTP) and the willingness to accept (WTA) that exists in the market.

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Section: Methodsmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Endowment Effect, Information Asymmetry, and Real Estate Market Decisions: Willingness to Pay and Willingness to Accept Disparities

Mwanyepedza,

Mishi

2024

Real Estate Management and Valuation

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“…Chu and Shu [8] summarize that the endowment effect clarifies a tendency for individuals to demand more for selling an object they possess than the price people give up for the preliminary purchase of this object. Mi [5] points out that because of the loss aversion psychology, people have the inclination to put a premium when selling their possessions.…”

Section: Endowment Effectmentioning

confidence: 99%

A Comprehensive Review of the Blind Box Economy

Liu

2024

AEMPS

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Blind box, an unlabeled box containing different styles of random uncertain goods, is a newly spring-up marketing strategy that utilizes consumers intention of pursuing uncertainty and surprise to stimulate the consumption temptation. The blind box economy has obtained rapid development in recent years, arousing a consumption boom of this kind of uncertain goods. Despite the large amount of sales revenue received in the blind-box market, this fresh and developing economic form still has some drawbacks and problems awaiting to be solved. Although current studies on blind box economy are scarce in number, researchers are still making efforts to extend the analysis scope. This paper sorts and reviews previous studies of the blind box economy. Firstly, the background information about the blind-box economy trend is introduced. Secondly, the paper clarifies the reasons for the blind box market emergence based on behavioral economics. Finally, the potential problems and relevant suggestions for the blind box market are covered. In the conclusion part, the limitations and possible improvements of current research are discussed. This paper finds out that consumers irrational purchasing behavior is one of the most significant reasons for the blind-box economy prevalence and potential problems.

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“…Second, the literature on psychological ownership has found that extending ownership beyond simple legal ownership of the object onto a memento or reminder of the object (e.g., by taking a photo of the good) may increase the seller's willingness to dispose of goods they care about (Chu 2018;Chu and Shu 2022;Kellett and Holden 2014;Winterich, Reczek, and Irwin 2017). Since heritage goods connect individuals to a shared past, their psychological ownership is, at least in part, collective (Belk 2010(Belk , 2017Curasi, Price, and Arnould 2004;Epp and Price 2008;Lastovicka and Fernandez 2005;McCracken 1986).…”

Section: Theoretical Developmentmentioning

confidence: 99%

The Role of Heritage Connection in Consumer Valuation

Christensen¹,

Shu²

2023

Journal of Marketing Research

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Owners value heritage goods, items that connect them to a shared past, whether through their alma mater or their family history. This research considers the impact of heritage on owners who wish to sell such goods. In five studies, we demonstrate that sellers have a lower willingness-to-accept (WTA) for heritage goods when selling to buyers with a shared heritage connection relative to buyers without this connection (i.e., a heritage discount). This heritage discount cannot be explained by in-group favoritism, sentimental value, or appropriateness of buyer usage and persists even when sellers perceive that the buyer has a higher willingness-to-pay (WTP). We provide process evidence that the effect of the buyer’s identity on the seller’s WTA is driven by concerns about heritage loss. Our findings contribute to literatures on sharing, sentimental goods, psychological ownership, and the endowment effect, and have marketing implications for consumer goods (e.g., collectibles) that derive product value by connecting consumers to meaningful history and traditions.

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Mementos and the endowment effect

Cited by 6 publications

References 34 publications

Endowment Effect, Information Asymmetry, and Real Estate Market Decisions: Willingness to Pay and Willingness to Accept Disparities

Endowment Effect, Information Asymmetry, and Real Estate Market Decisions: Willingness to Pay and Willingness to Accept Disparities

A Comprehensive Review of the Blind Box Economy

The Role of Heritage Connection in Consumer Valuation

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