MCS 6950 - Laurence Ashworth

Laurence Ashworth (Queen's School of Business)

Buying, Selling, and the Endowment Effect

Abstract  The current work investigates the idea that differences in owners’ and non-owners’ prices might exist because consumers are typically required to specify prices at which they would trade (i.e., buy or sell).  This suggests that owners and non-owners might set prices above or below whatever the good is really worth to them to motivate trade.  When ownership and trading are separated we find that the endowment effect disappears and that the motivation to trade explains the differences in WTP and WTA that are typically attributed to ownership.

http://business.queensu.ca/faculty_and_research/faculty_list/lashworth.php