The Endowment Effect and WTA: A Quasi-Experimental Test

Macdonald, H.F.; Bowker, J.M.

doi:10.1017/s1074070800026456

Cited by 10 publications

(5 citation statements)

References 8 publications

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“…In theory, WTP and WTA shall differ only by small amounts for nonessential goods with low budget shares. Empirical WTA estimates are however often considerably higher than WTP estimates for the same good (Hanemann, 1991;MacDonald and Bowker, 1994). Due to this observation, and especially since the recommendation from the ''NOAApanel'' to use WTP as a conservative choice (Arrow et al, 1993), when the natural setting calls for estimating WTA it is instead customary to estimate WTP.…”

Section: Wtp Versus Wtamentioning

confidence: 99%

“…One hypothesis concerning the WTP/WTA discrepancy is the existence of an ''endowment effect'', that is the supposition that individuals value losses more that commensurate gains. MacDonald and Bowker (1994) studied the presence of the endowment effect in an economic analysis of localized air pollution. Their findings show that perceived property rights may well be an important factor of the divergence.…”

Section: Wtp Versus Wtamentioning

confidence: 99%

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Valuing the benefits of public libraries

Aabø

2005

Information Economics and Policy

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Section: Wtp Versus Wtamentioning

confidence: 99%

Section: Wtp Versus Wtamentioning

confidence: 99%

Valuing the benefits of public libraries

Aabø

2005

Information Economics and Policy

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“…The issue of property rights has implications for whether the WTP or the WTA measures are to be given most weight. If the citizens appear to have an inherent right to the valued good, WTP measures will understate welfare impacts (MacDonald and Bowker, 1994, p. 547). In this study, the respondents' attitudes and awareness of property rights to their local library were elicited.…”

Section: The Norwegian Valuation Study Of Public Librariesmentioning

confidence: 99%

Are public libraries worth their price?

Aabø

2005

New Library World

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Purpose-The paper reports from a valuation study of the Norwegian public libraries, aiming to provide a better understanding of their total value, both use and non-use value, as viewed by the population. An objective was to explore whether or not the citizens found that their benefits outweighed the costs to provide them. Design/methodology/approach-The study applies the contingent valuation method, developed in economics to valuate non-market goods. Contingent valuation is based on representative questionnaire surveys and has been used to valuate several cultural goods, including a few library valuation studies. Findings-The empirical data based on a representative population sample demonstrates that the value of the Norwegian public libraries decidedly outweigh their costs. Elicitation of the population's awareness of property rights to their local library showed that an overwhelming majority of the population (94 per cent) perceive they have such rights. The valuation result indicates that the benefits from the public libraries are four times their costs. Research limitations/implications-The method is based on hypothetical markets. More contingent valuation studies of libraries are necessary to refine the measure instruments. The study explores the benefit-cost relation at the national level. Further research is needed for studying the benefit-cost relation at the municipal level. Practical implications-The findings can be used as one way of documenting the value of public libraries to politicians, local authorities and the general public. Originality/value-This appears to be the first contingent valuation study of public libraries at a national level, in Norway and internationally.

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“…It has been widely replicated in numerous settings. In addition to private goods, such as coffee cups, lottery tickets, and chocolates (e.g., Knetsch and Sinden, 1984; Kahneman et al, 1990), people also demonstrate the endowment effect for public goods, such as air quality and guidance services (MacDonald and Bowker, 1994; Bischoff, 2008). Besides adults, young children and non-human primates also demonstrate the same bias (Harbaugh et al, 2001; Venkat et al, 2008).…”

Section: Introductionmentioning

confidence: 99%

Modulating the Activity of MPFC With tDCS Alters Endowment Effect

Guo

Shi

et al. 2019

Front. Behav. Neurosci.

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Endowment effect – the observation that people appear to attach more value to possessions than non-possessions – has been replicated in numerous experimental studies. Previous neuroimaging studies revealed that the medial prefrontal cortex (MPFC) plays a role in the endowment effect. To assess the possibility of a direct causal relationship between the activity of MPFC and the endowment effect, we used transcranial direct current stimulation (tDCS) to transiently alter the neural activity in MPFC. Subsequently, in three stimulation treatments, we assessed the presence of the endowment effect, which was demonstrated by a disparity between willingness to accept (WTA) and willingness to pay (WTP). The results indicated that the participants demonstrated the endowment effect for a mug in the anodal and sham treatments, whereas no endowment effect was observed in the cathodal treatment. Similarly, endowment effect was observed for the other item (notebook) in the anodal treatment, whereas no endowment effect was observed in the sham and cathodal treatments. In addition, the participants tended to sell higher and buy lower after receiving anodal tDCS over MPFC and buy higher after receiving cathodal tDCS over MPFC. As a result, the present study demonstrated a direct causal relationship between the activity of MPFC and the endowment effect.

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The Endowment Effect and WTA: A Quasi-Experimental Test

Cited by 10 publications

References 8 publications

Valuing the benefits of public libraries

Valuing the benefits of public libraries

Are public libraries worth their price?

Modulating the Activity of MPFC With tDCS Alters Endowment Effect

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