The Endowment Effect: Is a Bird in the Hand Worth More than Two in the Bush?

This study examines the concept of the endowment effect and the role of cultural factors in shaping this phenomenon. The endowment effect refers to the tendency of individuals to assign a higher value to items they own compared to items they do not yet possess. Accordingly, the perceived value of a product by an individual varies depending on whether that person is a buyer or a seller. In this respect, although various concepts such as attachment to the product, loss aversion, transaction cost, income effect, and uncertainty are used in the literature to explain the subjective evaluation of a product, the most frequently employed concept in this explanation is the endowment effect. Rooted in both psychological and economic principles, this effect is explained through factors such as loss aversion, emotional attachment, status quo preference, and reference dependence. Experimental studies in the literature highlight how cultural differences influence the strength of the endowment effect. For example, it has been observed that individuals with higher market experience exhibit a weaker endowment effect, while cultural elements such as individualism and collectivism shape this tendency. The study, in this regard, suggests that the endowment effect, which is described as “cognitive bias†, is not a universal phenomenon but rather a culturally constructed concept.