Endowment Effect - Examples

Examples

One of the most famous examples of the endowment effect in the literature is from a study by Kahneman, Knetsch & Thaler (1990) where human participants were given a mug and then offered the chance to sell it or trade it for an equally priced alternative good (pens). Kahneman et al. (1990) found that participants WTA compensation for the mug (once their ownership of the mug had been established) was approximately twice as high as their WTP for it.

Other examples of the endowment effect include work by Carmon and Ariely (2000) who found that participants' hypothetical selling price (WTA) for NCAA final four tournament tickets were 14 times higher than their hypothetical buying price (WTP). Alsom, Work by Hossain and List (Working Paper) discussed in the Economist (2010), showed that workers worked harder to maintain ownership of a provisional awarded bonus than they did for a bonus framed as a potential yet-to-be-awarded gain. In addition to these examples, the endowment effect has been observed in a wide range of different populations using different goods (see Hoffman and Spitzer,1993 for a review ) including children (Harbaugh et al., 2001) great apes (Kanngiesser, Santos, Hood, Call, 2011), and old world monkeys (Lakshminaryanan, Chen & Santos, 2008).

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