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Mispredicting Others' Valuations: Self-Other Difference in the Context of Endowment

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  • Didem Kurt
  • J. Jeffrey Inman

Abstract

The authors argue that people systematically fail to predict how much others in the same role (i.e., owner or buyer) value an object due to self-other differences in valuation arising from intra-role empathy gaps. Across five studies in an endowment context, owners consistently underestimate the average selling price demanded by other owners, whereas buyers overestimate the average purchase price offered by other buyers by over 20%. Participants, however, make more accurate predictions of the valuation of others in the same role when either (a) an external influence (i.e., similarity priming) or (b) their high cognitive and emotional tendency to connect with others leads to a reduction in empathy gaps. Implications for theory and practice are discussed.

Suggested Citation

  • Didem Kurt & J. Jeffrey Inman, 2013. "Mispredicting Others' Valuations: Self-Other Difference in the Context of Endowment," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 40(1), pages 78-89.
    • Handle: RePEc:oup:jconrs:doi:10.1086/668888
    DOI: 10.1086/668888
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    Cited by:

    1. Achilleas Vassilopoulos & Niki Avgeraki & Stathis Klonaris, 2020. "Social desirability and the WTP–WTA disparity in common goods," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 22(7), pages 6425-6444, October.
    2. Drichoutis, Andreas C. & Lusk, Jayson L. & Pappa, Valentina, 2016. "Elicitation formats and the WTA/WTP gap: A study of climate neutral foods," Food Policy, Elsevier, vol. 61(C), pages 141-155.
    3. Kim, Hyunji & Schnall, Simone, 2021. "Profit for friends, fairness for strangers: Social distance reverses the endowment effect in proxy decision making," Journal of Retailing and Consumer Services, Elsevier, vol. 59(C).
    4. Breitmoser, Yves, 2019. "Knowing me, imagining you: Projection and overbidding in auctions," Games and Economic Behavior, Elsevier, vol. 113(C), pages 423-447.
    5. Daniel Villanova, 2019. "The extended self, product valuation, and the endowment effect," AMS Review, Springer;Academy of Marketing Science, vol. 9(3), pages 357-371, December.
    6. Drichoutis, Andreas C. & Vassilopoulos, Achilleas & Lusk, Jayson L. & Nayga, Rodolfo M. Jr., 2015. "Reference dependence, consequentiality and social desirability in value elicitation: A study of fair labor labeling," 143rd Joint EAAE/AAEA Seminar, March 25-27, 2015, Naples, Italy 202705, European Association of Agricultural Economists.
    7. William J. Matthews & Ana I. Gheorghiu & Mitchell J. Callan, 2016. "Why do we overestimate others' willingness to pay?," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 11(1), pages 21-39, January.
    8. Dominic Bergers, 2021. "Individual differences in the susceptibility of biases relevant in price management: a state-of-the-art article," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 20(4), pages 497-528, August.
    9. repec:cup:judgdm:v:11:y:2016:i:1:p:21-39 is not listed on IDEAS
    10. Breitmoser, Yves, 2017. "Knowing Me, Imagining You:," Rationality and Competition Discussion Paper Series 36, CRC TRR 190 Rationality and Competition.
    11. Nicole Koschate-Fischer & Katharina Wüllner, 2017. "New developments in behavioral pricing research," Journal of Business Economics, Springer, vol. 87(6), pages 809-875, August.
    12. Drichoutis, Andreas C. & Vassilopoulos, Achilleas & Lusk, Jayson & Nayga, Rodolfo M., 2015. "Fair farming: Preferences for fair labor certification using four elicitation methods," MPRA Paper 62546, University Library of Munich, Germany.
    13. Mihaela Åžtir & Adriana Zaiå¢, 2019. "Potential Impact Of Virtual Touching On Endowment And Feelings Of Ownership. A Literature Review Of Concepts And Scales," Review of Economic and Business Studies, Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, issue 24, pages 145-162, December.

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