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An investigation of the endowment effect using a factorial design

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Authors
Jefferson, Therese
Taplin, Ross
Date
2011
Type
Journal Article

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Jefferson, Therese and Taplin, Ross. 2011. An investigation of the endowment effect using a factorial design. Journal of Economic Psychology. 32 (6): pp. 899-907.
Source Title
Journal of Economic Psychology
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Graduate School of Business
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Notice: This is the author's verions of a work that was accepted for publication in Journal of Economic Psychology. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in Journal of Economic Psychology, 32, 6, 2011. DOI: 10.1016/j.joep.2011.08.004

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Abstract

The endowment effect is interpreted as evidence that we may 'over value' objects we alreayd own. In this study we introduce a novel approach to investigating the endowment effect, the factorial survey design, which enables manipulation of variables potentially influencing the endowment effect. We consider the value and uniqueness of the possession, whether it is a gift from a close friend and whether the trade is with a stranger. We find a higher endowment effect for possessions received as gifts from a close friend and this effect is entirely due to responses from women. Furthermore, we find significantly higher endowment effects for valuable possessions. Our results suggest there is ample scope for broadening the range of methors applied to this area of economic research.