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The Endowment Effect and Self-Determination as Drivers of Co-Creation Online

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  • Julia M. Puaschunder

    (Columbia University, USA)

Abstract

One of the most studied behavioral economics effects is the endowment effect. If people are asked to pay for a normal good (e.g., like a mug or pen), the price they offer tends to be lower than if they are given the same good and asked for what price they are willing to sell the good. The endowment effect is believed to stem from the value imbued in possession and the expectation to hold onto the possession once a good is acquired. The psychological effect of self-determination on the motivation of people has been studied in psychology for a long time. Self-determined decisions hold positive advantages of people getting a positive boost from their own volition. Self-determined people tend to follow with through their plans and work longer and better on tasks than those who just fulfill externally-imposed goals. The endowment effect and self-determined decisions may underlie the fascination of co-creation online. Online luxury worlds have been booming in the last decade. Virtual co-creation in homepages, blogs, social online media and video self-streaming platforms has created a new source of social and monetary value as never before in the history of humankind. Social online media influencers are now one of the most prominent career choices in the upcoming generation. This paper attempts to connect the endowment effect with self-determined co-creation online effects, which appears to take the economy over by storm. The paper offers a first glimpse of the new phenomenon. Human rights online and ethical predicament in internet markets will be discussed, as well as future research avenues on the topic.

Suggested Citation

  • Julia M. Puaschunder, 2023. "The Endowment Effect and Self-Determination as Drivers of Co-Creation Online," RAIS Conference Proceedings 2022-2023 0318, Research Association for Interdisciplinary Studies.
    • Handle: RePEc:smo:raiswp:0318
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    References listed on IDEAS

    as
    1. Harbaugh, William & Krause, Catherine & Vesterlund, Lise, 2001. "Are Children Better Behaved Than Adults? Age, Experience and the Endowment Effect," Staff General Research Papers Archive 1950, Iowa State University, Department of Economics.
    2. Daniel Kahneman & Amos Tversky, 2013. "Prospect Theory: An Analysis of Decision Under Risk," World Scientific Book Chapters, in: Leonard C MacLean & William T Ziemba (ed.), HANDBOOK OF THE FUNDAMENTALS OF FINANCIAL DECISION MAKING Part I, chapter 6, pages 99-127, World Scientific Publishing Co. Pte. Ltd..
    3. Charles R. Plott & Kathryn Zeiler, 2007. "Exchange Asymmetries Incorrectly Interpreted as Evidence of Endowment Effect Theory and Prospect Theory?," American Economic Review, American Economic Association, vol. 97(4), pages 1449-1466, September.
    4. 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.
    5. Hoffman, Elizabeth & Spitzer, Matthew L., 1993. "Willingness-To-Pay vs. Willingness-To-Accept: Legal and Economic Implications," ISU General Staff Papers 199301010800001571, Iowa State University, Department of Economics.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Co-creation online; Economics; Endowment Effect; Law & Economics; Luxury; Online; Self-determined Decisions; Virtual Markets;
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