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The Effect of Initial Endowments in Experimental Auctions

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  • Jay R. Corrigan
  • Matthew C. Rousu

Abstract

We report the results of an experiment designed to test whether initial endowments affect value estimates elicited from experimental auctions. Comparing bids for one unit of a good, two units of a good, and a second unit of a good when endowed with the first unit, we find that willingness to pay for the second unit of a good is, on average, as much as 75% higher when endowed with the first unit. We go on to advance two theories that could potentially reconcile our results with neoclassical consumer theory. Copyright 2006, Oxford University Press.

Suggested Citation

  • Jay R. Corrigan & Matthew C. Rousu, 2006. "The Effect of Initial Endowments in Experimental Auctions," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(2), pages 448-457.
    • Handle: RePEc:oup:ajagec:v:88:y:2006:i:2:p:448-457
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    File URL: http://hdl.handle.net/10.1111/j.1467-8276.2006.00870.x
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