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WTP vs.WTA: Christmas Presents and the Endowment Effect

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  • Bauer, Thomas K.
  • Schmidt, Christoph M.

Abstract

Using data on the valuation of Christmas gifts received by students in different fields at a German university, we investigate whether the endowment effect differs between students of economics and other respondents and whether it varies with the market price of the object under consideration. Our estimation results suggest that economics students have both, a significant lower WTP and WTA, indicating that existing studies on the efficiency loss of holiday gifts and experimental studies on the endowment effect that rely on data from economics students may be biased. The result further indicate that the endowment effect is independent of the market price of the object.

Suggested Citation

  • Bauer, Thomas K. & Schmidt, Christoph M., 2008. "WTP vs.WTA: Christmas Presents and the Endowment Effect," Ruhr Economic Papers 75, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    • Handle: RePEc:zbw:rwirep:75
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    References listed on IDEAS

    as
    1. Jack L. Knetsch & J. A. Sinden, 1984. "Willingness to Pay and Compensation Demanded: Experimental Evidence of an Unexpected Disparity in Measures of Value," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 99(3), pages 507-521.
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    5. Steven D. Levitt & John A. List, 2007. "What Do Laboratory Experiments Measuring Social Preferences Reveal About the Real World?," Journal of Economic Perspectives, American Economic Association, vol. 21(2), pages 153-174, Spring.
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    8. Waldfogel, Joel, 1993. "The Deadweight Loss of Christmas," American Economic Review, American Economic Association, vol. 83(5), pages 1328-1336, December.
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    Cited by:

    1. Laura Birg & Anna Goeddeke, 2016. "Christmas Economics—A Sleigh Ride," Economic Inquiry, Western Economic Association International, vol. 54(4), pages 1980-1984, October.
    2. Birg, Laura & Pommeranz, Simon, 2018. "The deadweight loss of christmas - Reply," University of Göttingen Working Papers in Economics 361, University of Goettingen, Department of Economics.
    3. Parag Waknis & Ajit Gaikwad, 2017. "The Deadweight Loss of Diwali: A Developing Country Perspective on Economics of Gift Giving," Economics Bulletin, AccessEcon, vol. 37(1), pages 530-538.
    4. Vic Benuyenah, 2021. "Face-saving and Seasonal Gifts: Analysis of Cultural Exchanges in the Confucian Market Place," International Review of Management and Marketing, Econjournals, vol. 11(2), pages 59-66.

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    More about this item

    Keywords

    Loss aversion; endowment effect; Christmas presents; deadweight loss;
    All these keywords.

    JEL classification:

    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D49 - Microeconomics - - Market Structure, Pricing, and Design - - - Other
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis

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