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Consumption experience, choice experience and the endowment effect

Author

Listed:
  • Steven J Humphrey

    (Faculty of Business and Economics, University of Osnabrück, Germany)

  • Luke Lindsay

    (Department of Economics, University of Zurich)

  • Chris Starmer

    (School of Economics, University of Nottingham)

Abstract

This paper reports an experiment investigating how different kinds of experience influence the endowment effect. Previous studies have investigated how the endowment effect is influenced by experience gained through repetition of decision problems and trading in natural and experimental markets. In this study we explore how it is influenced by experience of consuming elements of a potential endowment and by experience of choosing prior to acquiring an endowment. We find evidence of an endowment effect and that measured loss aversion predicts the reluctance to trade. We find no effect of consumption experience. Choice experience increases trading. Finally, we find evidence of a new species of 'splitting effect', whereby acquiring an endowment in two instalments significantly reduces trading.

Suggested Citation

  • Steven J Humphrey & Luke Lindsay & Chris Starmer, 2012. "Consumption experience, choice experience and the endowment effect," Discussion Papers 2012-16, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
  • Handle: RePEc:not:notcdx:2012-16
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    References listed on IDEAS

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    Cited by:

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    2. John List, 2020. "Experimental tests of the endowment effect and the Coase theorem," Natural Field Experiments 00687, The Field Experiments Website.

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    More about this item

    Keywords

    endowment effect; experience; splitting effects;
    All these keywords.

    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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