Consumption experience, choice experience and the endowment effect
Journal of the Economic Science Association
© The Author(s) 2017. Open Access. This article is distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution, and reproduction in any medium, provided you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license, and indicate if changes were made.
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 followup 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.
Starmer acknowledges the support of the ESRC funded Network for Integrated Behavioural Science (awards ES/K002201/1 and ES/P008976/1). Lindsay acknowledges the support of the ESRC (PTA-0300-2005-00567).
This is the author accepted manuscript. The final version is available from Springer via the DOI in this record.
Vol. 3 (2), pp. 109-120