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Endowment effects at different time scenarios: the role of ownership and possession

Author

Listed:
  • Domenico Colucci
  • Chiara Franco
  • Vincenzo Valori
Abstract
The central issue of the wide literature about the endowment effect is the search for an explanation of the fact that the selling price of a good will be higher than that at which a person is willing to buy that same good, once they own it. The experimental evidence is not unanimous in replicating the results found by Kahneman et al. (1990 and 1991). The challenge is that of disentangling the several determinants that may be at work in generating the final effect, as the loss aversion is not considered the only explanation. We dig deeper by examining two of these likely determinants which remain understudied: the first is the impact that the amount of time of ownership can have on the endowment effect. The second is the type of item (non-material good and exchange goods) used to test the effect. Through an online questionnaire we investigate these aspects by using three different goods: a mug, an Amazon Gift Card and a quarterly subscription to Spotify. We also test whether the endowment effect occurs in different time scenarios, that is if participants imagine to own the good for one day, one week or one month. We find that the endowment effect clearly appears for all types of goods while less clear results take shape when considering the duration of the ownership.

Suggested Citation

  • Domenico Colucci & Chiara Franco & Vincenzo Valori, 2021. "Endowment effects at different time scenarios: the role of ownership and possession," Discussion Papers 2021/279, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
    • Handle: RePEc:pie:dsedps:2021/279
    Note: ISSN 2039-1854
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    File URL: https://www.ec.unipi.it/documents/Ricerca/papers/2021-279.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    WTA/WTP gap; endowment effect; ownership experience; fungible goods; services; exchange goods;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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