Consumption experience, choice experience and the endowment effect

Humphrey, Steven J.; Lindsay, Luke; Starmer, Chris

Abstract

We report experiments investigating how experience influences the endowment effect. Our experiments feature endowments which are bundles of unfamiliar consumption goods. We examine how a subject’s willingness to swap items from their endowment is influenced by prior experiences of tasting the goods in question and by prior experiences of choosing between them. We do not find a statistically significant endowment effect in our baseline treatment and, because of this, we are unable to test for an effect of consumption experience. We do find an endowment effect when the endowment is acquired in two instalments and, in this setting, we find some evidence that choice experience increases trading. In a follow up experiment, we find evidence that the absence of an endowment effect in our baseline treatment is due to subjects being more willing to swap when they do not have to give up the last unit of their endowment.

Citation

Humphrey, S. J., Lindsay, L., & Starmer, C. (in press). Consumption experience, choice experience and the endowment effect. Journal- Economic Science Association, https://doi.org/10.1007/s40881-017-0044-z

• Journal Article Type: Article
• Acceptance Date: Nov 8, 2017
• Online Publication Date: Nov 27, 2017
• Deposit Date: Nov 28, 2017
• Publicly Available Date: Nov 28, 2017
• Journal: Journal of the Economic Science Association
• Electronic ISSN: 2199-6776
• Peer Reviewed: Peer Reviewed
• DOI: https://doi.org/10.1007/s40881-017-0044-z
• Keywords: Endowment effect; Experience; Splitting effects
• Public URL: https://nottingham-repository.worktribe.com/output/897002
• Publisher URL: https://link.springer.com/article/10.1007/s40881-017-0044-z
• Contract Date: Nov 28, 2017