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WTP vs. WTA: Christmas Presents and the Endowment Effect

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  • Thomas K. Bauer

    ()
    (RWI Essen)

  • Christoph M. schmidt

    ()
    (Ruhr-Universitaet Bochum)

Abstract

Using data on the valuation of Christmas gifts received by students enrolled in different fields at a German university, we investigate whether the endowment effect, the difference between asking and bidding prices, differs between males and females, students of economics and other fields and whether it varies with the market price of the object under consideration. Our estimation results suggest that female students display a significantly higher endowment effect, indicating that experimental studies on the endowment effect are highly sensitive towards the choice of the subject pool. The results further indicate that the endowment effect depends on the market price of the object. Finally, even though the point estimates hint towards both, a lower WTP andWTA of economic students, these differences are not statistically significant at conventional levels.

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Bibliographic Info

Article provided by Justus-Liebig University Giessen, Department of Statistics and Economics in its journal Journal of Economics and Statistics.

Volume (Year): 232 (2012)
Issue (Month): 1 (January)
Pages: 4-11

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Handle: RePEc:jns:jbstat:v:232:y:2012:i:1:p:4-11

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Related research

Keywords: Loss aversion; endowment effect; Christmas presents; deadweight loss; bidding price; asking price.;

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References

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  1. Simon Gaechter & Eric Johnson & Andreas Herrmann, 2007. "Individual-Level Loss Aversion In Riskless And Risky Choices," Discussion Papers 2007-02, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
  2. John A. List, 2003. "Does Market Experience Eliminate Market Anomalies?," The Quarterly Journal of Economics, MIT Press, vol. 118(1), pages 41-71, February.
  3. repec:feb:framed:0054 is not listed on IDEAS
  4. Steven D. Levitt & John A. List, 2007. "What Do Laboratory Experiments Measuring Social Preferences Reveal About the Real World?," Journal of Economic Perspectives, American Economic Association, vol. 21(2), pages 153-174, Spring.
  5. List, John A & Shogren, Jason F, 1998. "The Deadweight Loss of Christmas: Comment," American Economic Review, American Economic Association, vol. 88(5), pages 1350-55, December.
  6. Michael Haigh & John List, 2005. "Do professional traders exhibit myopic loss aversion? An experimental analysis," Artefactual Field Experiments 00052, The Field Experiments Website.
  7. John List & Jay Shogren, 2002. "Calibration of willingness-to-accept," Framed Field Experiments 00182, The Field Experiments Website.
  8. Knetsch, Jack L & Sinden, J A, 1984. "Willingness to Pay and Compensation Demanded: Experimental Evidence of an Unexpected Disparity in Measures of Value," The Quarterly Journal of Economics, MIT Press, vol. 99(3), pages 507-21, August.
  9. 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 1325-48, December.
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