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Attachment or Ownership: Reference Point Shifts and an Experimental Test of Attachment

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  • Makoto Nakada

    (Hitotsubashi University)

Abstract

This paper suggests a hypothesis that feelings of attachment change subjective valuation through reference point shifts. This attachment hypothesis can explain seemingly contradictory results of recent experiments concerning what are called endowment effects, in which there exists disparities of valuation between owners and nonowners. That is, individuals who are attached to a good value it highly. We propose a model of value function that illustrates the attachment hypothesis. In this model, feelings of attachment shift the reference point. In addition, we test the effect of attachment on subjective valuation by experimentally controlling attachment, using a psychological method called priming manipulation.

Suggested Citation

  • Makoto Nakada, 2012. "Attachment or Ownership: Reference Point Shifts and an Experimental Test of Attachment," Keio/Kyoto Joint Global COE Discussion Paper Series 2012-012, Keio/Kyoto Joint Global COE Program.
  • Handle: RePEc:kei:dpaper:2012-012
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    File URL: http://ies.keio.ac.jp/old_project/old/gcoe-econbus/pdf/dp/DP2012-012.pdf
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    1. Kahneman, Daniel & Tversky, Amos, 1979. "Prospect Theory: An Analysis of Decision under Risk," Econometrica, Econometric Society, vol. 47(2), pages 263-291, March.
    2. Andrea Isoni & Graham Loomes & Robert Sugden, 2011. "The Willingness to Pay—Willingness to Accept Gap, the "Endowment Effect," Subject Misconceptions, and Experimental Procedures for Eliciting Valuations: Comment," American Economic Review, American Economic Association, vol. 101(2), pages 991-1011, April.
    3. John A. List, 2003. "Does Market Experience Eliminate Market Anomalies?," The Quarterly Journal of Economics, Oxford University Press, vol. 118(1), pages 41-71.
    4. Knetsch, Jack L. & Wong, Wei-Kang, 2009. "The endowment effect and the reference state: Evidence and manipulations," Journal of Economic Behavior & Organization, Elsevier, vol. 71(2), pages 407-413, August.
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