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Explaining the Endowment Effect through Ownership: The Role of Identity, Gender, and Self-Threat

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  • Sara Loughran Dommer
  • Vanitha Swaminathan
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    Abstract

    The price people are willing to pay for a good is often less than the price they are willing to accept to give up the same good, a phenomenon called the endowment effect. Loss aversion has typically accounted for the endowment effect, but an alternative explanation suggests that ownership creates an association between the item and the self, and this possession-self link increases the value of the good. To test the ownership account, this research examines three moderators that theory suggests should affect the possession-self link and consequently the endowment effect: self-threat, identity associations of a good, and gender. After a social self-threat, the endowment effect is strengthened for in-group goods among both men and women but is eliminated for out-group goods among men (but not women). These results are consistent with a possession-self link explanation and therefore suggest that ownership offers a better explanation for the endowment effect.

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    File URL: http://www.jstor.org/stable/pdfplus/10.1086/666737
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    File URL: http://www.jstor.org/stable/full/10.1086/666737
    Download Restriction: Access to the online full text or PDF requires a subscription.

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    Bibliographic Info

    Article provided by University of Chicago Press in its journal Journal of Consumer Research.

    Volume (Year): 39 (2013)
    Issue (Month): 5 ()
    Pages: 1034 - 1050

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    Handle: RePEc:ucp:jconrs:doi:10.1086/666737

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    Web page: http://www.journals.uchicago.edu/JCR/

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