IDEAS home Printed from https://ideas.repec.org/h/eee/expchp/7-101.html

The Endowment Effect

In: Handbook of Experimental Economics Results

Author

Listed:
  • Kujal, Praveen
  • Smith, Vernon L.

Abstract

The divergence between the willingness-to-pay (WTP) and willingness-to-accept (WTA) has resulted in two explanations. First, that this may be due to the manifestation of the endowment effect (Kahneman, Knetsch and Thaler, 1991). Second, the difference between WTA and WTP is directly related with the substitutability of the goods (Haneman, 1991). In this paper we show that one can observe undertrading in markets even if the WTA-WTP discrepancy is negligible. Due to underrevelation of intramarginal units very flat reported inverse supply and demand curves are obtained. As a result very small deviations in reported WTA and WTP can lead to undertrading.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Kujal, Praveen & Smith, Vernon L., 2008. "The Endowment Effect," Handbook of Experimental Economics Results, in: Charles R. Plott & Vernon L. Smith (ed.), Handbook of Experimental Economics Results, edition 1, volume 1, chapter 101, pages 949-955, Elsevier.
    • Handle: RePEc:eee:expchp:7-101
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/B7P5N-4SYS65G-42/2/2cad2f61c775193e8a754fd7f54e61cd
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or

    for a different version of it.

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Diego Salzman, 2013. "Behavioural Real Estate," ERES eres2013_334, European Real Estate Society (ERES).
    2. Kohei Daido & Takeshi Murooka, 2016. "Team Incentives and Reference‐Dependent Preferences," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 25(4), pages 958-989, December.
    3. Tan, Jonathan H.W. & Zhao, Zichen & Zizzo, Daniel John, 2025. "Inference from field and laboratory experiments in economics: empirical evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 235(C).
    4. Roth, Gerrit, 2006. "Predicting the Gap between Willingness to Accept and Willingness to Pay," Munich Dissertations in Economics 4901, University of Munich, Department of Economics.
    5. Amitai Etzioni, 2011. "Behavioural Economics: Next Steps," Journal of Consumer Policy, Springer, vol. 34(3), pages 277-287, September.

    More about this item

    JEL classification:

    • C - Mathematical and Quantitative Methods

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:expchp:7-101. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevierdirect.com/product.jsp?isbn=9780444826428 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.