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Endowment effect for hedonic but not utilitarian goods

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  • Chan, Eugene Y.

Abstract

This research proposes that the WTA–WTP disparity between sellers and buyers in the endowment effect can be understood in terms of sellers' emotional attachment to the endowed item. Consistent with this hypothesis and how affective considerations are more diagnostic for hedonic than utilitarian goods, the results of an experiment indicate that the pricing disparity occurs primarily for hedonic goods. This finding explains many of the moderators that have been proffered for the endowment effect.

Suggested Citation

  • Chan, Eugene Y., 2015. "Endowment effect for hedonic but not utilitarian goods," International Journal of Research in Marketing, Elsevier, vol. 32(4), pages 439-441.
    • Handle: RePEc:eee:ijrema:v:32:y:2015:i:4:p:439-441
    DOI: 10.1016/j.ijresmar.2015.06.003
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    References listed on IDEAS

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    1. Amos Tversky & Daniel Kahneman, 1991. "Loss Aversion in Riskless Choice: A Reference-Dependent Model," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 106(4), pages 1039-1061.
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    3. Kahneman, Daniel & Knetsch, Jack L & Thaler, Richard H, 1990. "Experimental Tests of the Endowment Effect and the Coase Theorem," Journal of Political Economy, University of Chicago Press, vol. 98(6), pages 1325-1348, December.
    4. Daniel Kahneman & Jack L. Knetsch & Richard H. Thaler, 1991. "Anomalies: The Endowment Effect, Loss Aversion, and Status Quo Bias," Journal of Economic Perspectives, American Economic Association, vol. 5(1), pages 193-206, Winter.
    5. Pham, Michel Tuan, 1998. "Representativeness, Relevance, and the Use of Feelings in Decision Making," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 25(2), pages 144-159, September.
    6. Martinez, Luis F. & Zeelenberg, Marcel & Rijsman, John B., 2011. "Regret, disappointment and the endowment effect," Journal of Economic Psychology, Elsevier, vol. 32(6), pages 962-968.
    7. Lyle Brenner & Yuval Rottenstreich & Sanjay Sood & Baler Bilgin, 2007. "On the Psychology of Loss Aversion: Possession, Valence, and Reversals of the Endowment Effect," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 34(3), pages 369-376, May.
    8. Horowitz, John K. & McConnell, Kenneth E., 2002. "A Review of WTA/WTP Studies," Journal of Environmental Economics and Management, Elsevier, vol. 44(3), pages 426-447, November.
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    Cited by:

    1. Martin P. Fritze & Andreas B. Eisingerich & Martin Benkenstein, 2019. "Digital transformation and possession attachment: examining the endowment effect for consumers’ relationships with hedonic and utilitarian digital service technologies," Electronic Commerce Research, Springer, vol. 19(2), pages 311-337, June.
    2. Otto, Philipp E. & Schmidt, Lennard, 2021. "Reservation price uncertainty: Loss, virtue, or emotional heterogeneity?," Journal of Economic Psychology, Elsevier, vol. 87(C).
    3. Jae-Do Song & Young-Hwan Ahn, 2019. "Cognitive Bias in Emissions Trading," Sustainability, MDPI, vol. 11(5), pages 1-13, March.
    4. Annika Wiecek & Daniel Wentzel & Aras Erkin, 2020. "Just print it! The effects of self-printing a product on consumers’ product evaluations and perceived ownership," Journal of the Academy of Marketing Science, Springer, vol. 48(4), pages 795-811, July.
    5. Xie, Guangming & Lü, Kevin & Gupta, Suraksha & Jiang, Yushi & Shi, Li, 2021. "How Dispersive Opinions Affect Consumer Decisions: Endowment Effect Guides Attributional Inferences," Journal of Retailing, Elsevier, vol. 97(4), pages 621-638.
    6. Lynch, John G. & Bradlow, Eric T. & Huber, Joel C. & Lehmann, Donald R., 2015. "Reflections on the replication corner: In praise of conceptual replications," International Journal of Research in Marketing, Elsevier, vol. 32(4), pages 333-342.
    7. Liu, Runqiu & Jiang, Jian & Yu, Chao & Rodenbiker, Jesse & Jiang, Yongmu, 2021. "The endowment effect accompanying villagers' withdrawal from rural homesteads: Field evidence from Chengdu, China," Land Use Policy, Elsevier, vol. 101(C).
    8. Vujicic, Maja & Vujicic-Tomic, Brankica & Klaric, Mia, 2019. "Meeting Halfway — Comparison Between Cost-Based And Demand-Based Pricing Methods," UTMS Journal of Economics, University of Tourism and Management, Skopje, Macedonia, vol. 10(2), pages 215-225.

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