The endowment effect in games

In a laboratory experiment we study whether the endowment effect exists in a social and strategic context. We employ a within-subjects design whereby participants are asked for their Willingness-to-Accept (WTA) or Willingness-to-Pay (WTP) to play a series of 2 × 2 games. In the second part of the ex...

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Bibliographic Details
Published inEuropean economic review Vol. 94; pp. 240 - 262
Main Authors Drouvelis, Michalis, Sonnemans, Joep
Format Journal Article
LanguageEnglish
Published Elsevier B.V 01.05.2017
Subjects
2×2 Games
Endowment effect
Experiment
2×2 Games
Experiment
Endowment effect
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Summary:In a laboratory experiment we study whether the endowment effect exists in a social and strategic context. We employ a within-subjects design whereby participants are asked for their Willingness-to-Accept (WTA) or Willingness-to-Pay (WTP) to play a series of 2 × 2 games. In the second part of the experiment, we study the endowment effect in lotteries with the same payoffs as the games in the first part. Our findings provide robust evidence for the endowment effect both in games and in lotteries, with the size of the effect actually being larger in games than in lotteries. We also find that the endowment effect can partly be attributed to optimism.
ISSN:0014-2921
1873-572X
DOI:10.1016/j.euroecorev.2017.03.005