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Experimental tests of the endowment effect

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  • Franciosi, Robert
  • Kujal, Praveen
  • Michelitsch, Roland
  • Smith, Vernon
  • Deng, Gang

Abstract

The discrepancy between WTA and WTP is supposed to be a manifestation of the endowment effect (KKT). The discrepancy between the average WTA-WTP disappears in the sense of statistical significance (Shogren et. at.) in settings with repeated interactions. In this paper we reexamine the KKT experimental procedures for identifying an endowment effect for consumer goods. No evidence of income or role effects is found. We show that even though the discrepancy between WTA-WTP diminishes undertrading can still persist in markets.
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Suggested Citation

  • Franciosi, Robert & Kujal, Praveen & Michelitsch, Roland & Smith, Vernon & Deng, Gang, 1996. "Experimental tests of the endowment effect," Journal of Economic Behavior & Organization, Elsevier, vol. 30(2), pages 213-226, August.
    • Handle: RePEc:eee:jeborg:v:30:y:1996:i:2:p:213-226
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    6. Shogren, Jason F. & Seung Y. Shin & Dermot J. Hayes & James B. Kliebenstein, 1994. "Resolving Differences in Willingness to Pay and Willingness to Accept," American Economic Review, American Economic Association, vol. 84(1), pages 255-270, March.
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