Is the Endowment Effect a Reference Effect? / Ori Heffetz, John A. List.

Format:

Book

Author/Creator:

Heffetz, Ori.

Contributor:

National Bureau of Economic Research.

List, John A.

Series:

Working Paper Series (National Bureau of Economic Research) no. w16715.

NBER working paper series no. w16715

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2011.

Summary:

This paper is aimed to assess, with two lab experiments, to what extent Kőszegi and Rabin's (2006) model of expectations-based reference-dependent preferences can explain Knetsch's (1989) endowment effect. Departing from past work, we design an experiment that treats the two goods (a mug and a pen) symmetrically in all but in the probabilities with which they are expected to be owned. Thus, our "endowmentless" endowment effect experiment shuts down all alternative mechanisms while leaving expectations the only difference between treatments. We find no evidence that expectations alone can reproduce any of the original effect.

Notes:

Print version record

January 2011.