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The Endowment Effect in Games

Author

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  • Michalis Drouvelis

    (University of Birmingham, United Kingdom)

  • Joep Sonnemans

    (University of Amsterdam, the Netherlands)

Abstract

We study experimentally whether the endowment effect survives in a social and strategic context. Participants are asked for their Willingness-to-Accept (WTA) or Willingness-to-Pay (WTP) to play a series of 2x2 games. In the second part of the experiment, we study the endowment effect in lotteries with the same payoffs as the games in the first part. Our findings provide robust evidence for the endowment effect both in games and in lotteries, with the size of the effect actually being larger in games than in lotteries. We also find that the endowment effect can partly be attributed to optimism.

Suggested Citation

  • Michalis Drouvelis & Joep Sonnemans, 2015. "The Endowment Effect in Games," Tinbergen Institute Discussion Papers 15-114/I, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20150114
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    References listed on IDEAS

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    2. Brebner, Sarah & Sonnemans, Joep, 2018. "Does the elicitation method impact the WTA/WTP disparity?," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 73(C), pages 40-45.

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    More about this item

    Keywords

    Experiment; Endowment Effect; 2x2 Games;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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