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Consumption experience, choice experience and the endowment effect

Author

Listed:
  • Steven J. Humphrey

    (University of Osnabrück)

  • Luke Lindsay

    (University of Exeter)

  • Chris Starmer

    () (School of Economics, University of Nottingham)

Abstract

Abstract We report experiments investigating how experience influences the endowment effect. Our experiments feature endowments which are bundles of unfamiliar consumption goods. We examine how a subject’s willingness to swap items from their endowment is influenced by prior experiences of tasting the goods in question and by prior experiences of choosing between them. We do not find a statistically significant endowment effect in our baseline treatment and, because of this, we are unable to test for an effect of consumption experience. We do find an endowment effect when the endowment is acquired in two instalments and, in this setting, we find some evidence that choice experience increases trading. In a follow-up experiment, we find evidence that the absence of an endowment effect in our baseline treatment is due to subjects being more willing to swap when they do not have to give up the last unit of their endowment.

Suggested Citation

  • Steven J. Humphrey & Luke Lindsay & Chris Starmer, 2017. "Consumption experience, choice experience and the endowment effect," Journal of the Economic Science Association, Springer;Economic Science Association, vol. 3(2), pages 109-120, December.
  • Handle: RePEc:spr:jesaex:v:3:y:2017:i:2:d:10.1007_s40881-017-0044-z
    DOI: 10.1007/s40881-017-0044-z
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    References listed on IDEAS

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    More about this item

    Keywords

    Endowment effect; Experience; Splitting effects;

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis

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