Heart strings and purse strings: Carryover effects of emotions on economic decisions

Abstract— We examined the impact of specific emotions on the endowment effect, the tendency for selling prices to exceed buying or "choice" prices for the same object. As predicted by appraisal-tendency theory, disgust induced by a prior, irrelevant situation carried over to normatively unrelated economic decisions, reducing selling and choice prices and eliminating the endowment effect. Sadness also carried over, reducing selling prices but increasing choice prices—producing a "reverse endowment effect" in which choice prices exceeded selling prices. The results demonstrate that incidental emotions can influence decisions even when real money is at stake, and that emotions of the same valence can have opposing effects on such decisions.     

Beyond mere ownership: transaction demand as a moderator of the endowment effect

Transaction demand refers to the motivation to complete a transaction. As transaction demand increases, owners should sell at lower prices and buyers should buy at higher ones. It was predicted that the endowment effect—the tendency for minimum selling price to exceed maximum buying price for a particular commodity—should be minimized when buyers and sellers have high transaction demand. The results of two experiments supported this hypothesis: In Experiment 1, the endowment effect was observed when participants imagined another individual wanting to buy from or sell to them, but not when they imagined wanting to buy from or sell to another individual. In Experiment 2, a reversal of the endowment effect was observed when transaction demand was high for both prospective buyers and sellers. The findings highlight the importance of motivational factors in addition to other factors (e.g., loss aversion, reference dependence) in determining behavior.     

Mementos and the endowment effect

This research provides evidence for a new moderator of the endowment effect: having a memento of the endowed object. Three studies adapting classic endowment effect paradigms and using a variety of endowment objects and mementos demonstrate that having a memento of an endowment increases willingness to trade the endowment and decreases selling prices for the endowment. We provide evidence that mementos attenuate the endowment effect regardless of whether the memento is a separate small gain when facing the loss of the endowment or a small part of the original endowment that is kept. Examining mementos in context of the endowment effect not only provides insight into the psychology underlying the reluctance to part with one's endowment but also other consumer disposition behaviors.     

How beliefs influence the relative magnitude of pleasure and pain

Loss aversion is an economic assumption about utility—people value giving up a good more than they value getting it. It also has hedonic meaning—the pain of a loss is greater in magnitude than the pleasure of a comparable gain. But value and pleasure are not necessarily identical. We test the hedonic interpretation of loss aversion in experimental markets. With hedonic forecasts, sellers imagine the pain of losing their endowment, and buyers imagine the pleasure of being endowed. With hedonic experiences, sellers rate the pleasure of having the endowment, and buyers rate the pain of being without it. Contrary to loss aversion, predicted pleasure is greater in magnitude than predicted pain, and experienced pleasure surpasses experienced pain. We show that the relative magnitude of pleasure and pain depends on beliefs about the likelihood of outcomes, as well as utilities. Surprise makes gains more pleasurable and losses more painful. With surprising gains and expected losses, pleasure can surpass pain. But when gains and losses are equally likely (or losses are surprising and gains are expected), the opposite pattern can occur. Finally, within‐group and between‐group prices are significantly correlated with hedonic experiences. Sellers who feel better with their endowments assign higher selling prices, and buyers who feel worse about the absence of endowment assign higher buying prices. Despite the fact that hedonic experiences deviate from loss aversion, these emotions predict the endowment effect. Copyright © 2009 John Wiley & Sons, Ltd.     

Constructing preference from experience: the endowment effect reflected in external information search

People often attach a higher value to an object when they own it (i.e., as seller) compared with when they do not own it (i.e., as buyer)--a phenomenon known as the endowment effect. According to recent cognitive process accounts of the endowment effect, the effect is due to differences between sellers and buyers in information search. Whereas previous investigations have focused on search order and internal search processes (i.e., in memory), we used a sampling paradigm to examine differences in search termination in external search. We asked participants to indicate selling and buying prices for monetary lotteries in a within-subject design. In an experience condition, participants had to learn about the possible outcomes and probabilities of the lotteries by experiential sampling. As hypothesized, sellers tended to terminate search after sampling high outcomes, whereas buyers tended to terminate search after sampling low outcomes. These differences in stopping behavior translated into samples of the lotteries that were differentially distorted for sellers and buyers; the amount of the distortion was predictive of the resulting size of the endowment effect. In addition, for sellers search was more extended when high outcomes were rare compared with when low outcomes were rare. Our results add to the increasing evidence that the endowment effect is due, in part, to differences in predecisional information search.     

引入中立方参照：对禀赋效应的再探讨

在以往禀赋效应研究的基础上, 本研究引入中立方估价值作为参照, 在时间维度上探讨了禀赋效应的变化趋势, 并尝试延伸禀赋效应的定义。研究发现, 随着卖方拥有物品的时间延长, 买卖双方的估价呈下降趋势, 卖方的估价总是显著高于买方, 但买卖双方的估价之差不随卖方拥有物品的时间延长发生变化; 以中立方的估价为参照, 在较短的时间内卖方的估价倾向于理性, 在较长的时间内买方的估价倾向于理性; 卖方的估价在时间水平上相对于中立价格呈递增性, 而买方的估价相对于中立价格呈递减性。引入中立方再探讨禀赋效应并没有否定它的存在, 而且能够更好地解释生活中的非理性行为。     

Gist-based memory for prices and “better buys” in younger and older adults

Ageing typically leads to various memory deficits which results in older adults’ tendency to remember more general information and rely on gist memory. The current study examined if younger and older adults could remember which of two comparable grocery items (e.g., two similar but different jams) was paired with a lower price (the “better buy”). Participants studied lists of grocery items and their prices, in which the two items in each category were presented consecutively (Experiment 1), or separated by intervening items (Experiment 2). At test, participants were asked to identify the “better buy” and recall the price of both items. There were negligible age-related differences for the “better buy” in Experiment 1, but age-related differences were present in Experiment 2 when there were greater memory demands involved in comparing the two items. Together, these findings suggest that when price information of two items can be evaluated and compared within a short period of time, older adults can form stable gist-based memory for prices, but that this is impaired with longer delays. We relate the findings to age-related changes in the use of gist and verbatim memory when remembering prices, as well as the associative deficit account of cognitive ageing.     

Bad riddance or good rubbish? Ownership and not loss aversion causes the endowment effect

People typically demand more to relinquish the goods they own than they would be willing to pay to acquire those goods if they did not already own them (the endowment effect). The standard economic explanation of this phenomenon is that people expect the pain of relinquishing a good to be greater than the pleasure of acquiring it (the loss aversion account). The standard psychological explanation is that people are reluctant to relinquish the goods they own simply because they associate those goods with themselves and not because they expect relinquishing them to be especially painful (the ownership account). Because sellers are usually owners, loss aversion and ownership have been confounded in previous studies of the endowment effect. In two experiments that deconfounded them, ownership produced an endowment effect but loss aversion did not. In Experiment 1, buyers were willing to pay just as much for a coffee mug as sellers demanded if the buyers already happened to own an identical mug. In Experiment 2, buyers’ brokers and sellers’ brokers agreed on the price of a mug, but both brokers traded at higher prices when they happened to own mugs that were identical to the ones they were trading. In short, the endowment effect disappeared when buyers were owners and when sellers were not, suggesting that ownership and not loss aversion causes the endowment effect in the standard experimental paradigm.     

Possession attachment: Individual differences in the endowment effect

The endowment effect suggests that people become attached to objects that are in their possession, and they demand a higher price to sell an object they own than they would be willing to pay to buy the same object. The results of four experiments support the suggestion that “possession attachment” is related to adult attachment styles in close relationships. Measures of attachment style in close relationships significantly predicted both actual and hypothetical selling prices moderating the endowment effect (Study 1), and significantly correlate with ratings of possession attachment (Study 2). Specifically, attachment anxiety is positively correlated with the selling prices of objects, while attachment avoidance shows no significant relation with object evaluation. The third and fourth experimental studies further demonstrated that attachment anxiety enhances possession evaluation and inhibits trades. The studies used real commodities and real money, and therefore, they have implications for everyday decisions as well as for the development of theories to better understand decisions about trades, negotiations, and choice of goods. Copyright © 2010 John Wiley & Sons, Ltd.     

Time pressure and the endowment effect

This research examines how time pressure influences bidding behavior in experiment auctions. The studies reported herein investigate how time pressure systematically impacts individual trading of an endowed object by looking at the disparity between buying and selling prices for that object. Study 1 tests whether the effect of time pressure eliminates the disparity between selling and buying prices. In Study 2, transaction demand is employed to see whether sellers and buyers are more sensitive to changes in the item (amount of work). In Study 3, sellers and buyers access information of differing valence in the task. In Study 4, the framing of the reference price is manipulated to moderate the endowment effect. These studies indicate that under time pressure, endowment bias is reduced and, more generally, elucidate the role of trading behavior in decision making.     

以计算机为中介的交流与权力对谈判结果的影响

采用2×2被试问实验设计,通过128名被试组成64个两人组参加的一项模拟商业谈判,考察了CMC与权力对分配式谈判结果的影响。结果发现：（1）EM与IM两种不同CMC条件下,成交价没有显著差异;（2）卖方权力较大时,成交价显著高于买卖双方权力平等的条件;（3）IM条件下,权力不平等时,女性组的成交价显著高于男性组;（4）IM条件下,权力平等的谈判者的主观价值感显著高于权力不平等者;权力不平等的条件下,男性的主观价值感显著高于女性。     

The spiral of distrust: (Non‐)cooperation in a repeated trust game is predicted by anger and individual differences in negative reciprocity orientation

This study investigated state anger and individual differences in negative reciprocity orientation as predictors of individuals' willingness to cooperate with strangers. In order to observe real behaviour, we used a trust game that was played over six periods. In the trust game, a first player (sender) determines how much of a certain endowment she/he wants to share with a second player (trustee), who then can give something back. We varied whether participants received feedback [feedback (yes, no)] about the trustee's behavioural decision (amount sent back). Supporting our hypotheses, the results suggest that feedback compared with no feedback about the trustee's behaviour increased anger. Specifically, information about low back transfers triggered anger and non‐cooperation in return. Importantly, participants with a strong negative reciprocity orientation reported higher levels of anger and were less willing to cooperate with the trustee compared with those with low negative reciprocity orientation. Moreover, even when anger was low, individuals with a strong negative reciprocity orientation were less willing to cooperate compared with those with a low negative reciprocity orientation. Thus, negative reciprocity orientation seems to arouse a spiral of distrust. Theoretical and practical implications of these findings are discussed.     

The impact of locus of control and priming on the endowment effect

This paper demonstrates the effects of different priming conditions on the endowment effect with respect to seller and buyer roles for individuals with different loci of control. Individuals with an external locus of control process information less rationally, and they are more susceptible to external influences. In addition, the literature reports that when individuals are making a purchasing decision, they tend to perceive the value of the product as being higher because of its utility aspect because decision makers search for reasons and arguments to justify their choices (Shafir 1993; Tversky & Griffin, 1991). Therefore, this study investigates the effects of different priming conditions (utilitarian priming vs. hedonic priming) on the endowment effect according to each type of locus of control (internal vs. external). The results showed that the endowment effect was larger when externals were exposed to utilitarian priming as opposed to hedonic priming. Finally, the implications of these findings and suggestions for future research are discussed.     

The Role of Anticipated Emotions in the Endowment Effect

This research explored the role of anticipated negative feelings in the observed disparity between buying and selling prices for the same endowed object. We assumed that anticipated negative reactions to losses deter people from trading an endowed object and therefore psychological variables that attenuate the emotional response to negative events should further reduce the price disparity between buyers and sellers. In 3 studies, we tested whether factors that either decrease concern about negative feelings (e.g., positive mood, framing of the transaction as involving no action) or increase the anticipated negative reaction to failure to act (e.g., priming errors of omission) further eliminate the disparity between buying and selling prices. These studies provide a novel conceptualization of the endowment bias and, more generally, illustrate the role of anticipated negative feelings in decision making.     

禀赋效应对产品更换决策的影响

以禀赋效应理论为研究基础, 通过两个情景实验对产品更换过程中买卖双方的决策心理进行了研究。实验1表明, 在以旧换新活动中新产品的买方对旧产品的价格有高估的倾向, 对新产品的价格有低估的倾向; 相反, 新产品的卖方对旧产品的价格有低估的倾向, 而对于新产品的价格有高估的倾向, 这说明产品更换决策中存在着双重的禀赋效应。实验2表明, 新产品的买方对旧产品的属性评价显著高于新产品的卖方, 对新产品的属性评价显著低于新产品的卖方, 说明属性评价也存在禀赋效应的特征。双重禀赋效应的存在从消费者行为的角度解释了为什么消费者会出现创新抵制行为。     

Egocentric empathy gaps between owners and buyers: misperceptions of the endowment effect

In 5 studies, the authors examined people's perceptions of the endowment effect, or the tendency to value an object more once one owns it. In the 1st 2 studies, the authors documented egocentric empathy gaps between owners and buyers regarding the endowment effect: Both owners and buyers overestimated the similarity between their own valuation of a commodity and the valuation of people in the other role. The next 2 studies showed that these empathy gaps may lead to reduced earnings in a market setting. The final study showed that egocentric empathy gaps stem partly from people's misprediction of what their own valuation would be if they were in the other role.     

Ownership Status and the Representation of Assets of Uncertain Value: The Balloon Endowment Risk Task (BERT)

Owners tend to overvalue possessions relative to non‐owners: a phenomenon known as the endowment effect. In three experiments, using markets for goods of uncertain value, we investigated whether this can be partly attributed to misperceiving an asset's profitability or to uncertainty about a good's utility. To test our hypotheses, we devised the Balloon Endowment Risk Task, in which participants can sell or buy their right to participate in the Balloon Analogue Risk Task. Once purchased/retained, a virtual balloon is pumped to accrue money, which is lost if the balloon bursts. Participants first learn about the risky asset (balloon) by observing others playing the Balloon Analogue Risk Task before they enter the market. In Experiment 1, we replicated the endowment effect; yet, owners and non‐owners predicted pumping the same number of times and subsequently did so when given that opportunity. In Experiments 2 and 3, the level of uncertainty about the balloon's profitability was manipulated by modifying the number of bursts that participants viewed in the initial learning stage. When more diagnostic information was provided, making the average burst point easier to estimate and reducing value uncertainty and increasing confidence in valuation, the endowment effect diminished although mean estimates of the average burst point did not differ between owners and non‐owners. Thus, endowment effects were partly attributable to value uncertainty but could not be explained by owners and non‐owners having divergent perceptions of the asset's payoff distribution. Copyright © 2014 John Wiley & Sons, Ltd.     

The role of internal reference prices in consumers' willingness to pay judgments: Thaler's Beer Pricing Task revisited

Alternative reference prices, either displayed in the environment (external) or recalled from memory (internal) are known to influence consumer judgments and decisions. In one line of previous research, internal reference prices have been defined in terms of general price expectations. However, Thaler (Marketing Science 4 (1985) 199; Journal of Behavioral Decision Making 12 (1999) 183) defined them as fair prices expected from specific types of seller. Using a Beer Pricing Task, he found that seller context had a substantial effect on willingness to pay, and concluded that this was due to specific internal reference prices evoked by specific contexts. In a think aloud study using the same task (N = 48), we found only a marginal effect of seller context. In a second study using the Beer Pricing Task and seven analogous ones (N = 144), general internal reference prices were estimated by asking people what they normally paid for various commodities. Both general internal reference prices and seller context influenced willingness to pay, although the effect of the latter was again rather small. We conclude that general internal reference prices have a greater impact in these scenarios than specific ones, because of the lower cognitive load involved in their storage and retrieval.     

The Seller's Sense: Buying–Selling Perspective Affects the Sensitivity to Expected Value Differences

Previous work comparing pricing decisions by buyers and sellers has primarily focused on the endowment effect, the phenomenon that selling prices exceed buying prices. Here, we examine whether pricing decisions by buyers and sellers also vary in sensitivity to differences between objects' expected values (EVs). Both a loss‐aversion account (which posits that losses are weighted more heavily than gains) and a loss‐attention account (which posits increased attention to a task when it involves possible losses) predict that pricing decisions by sellers should exhibit higher sensitivity. The latter, however, additionally predicts that this pattern should only emerge under certain conditions. In studies 1 and 2, we reanalyzed two published datasets in which participants priced monetary lotteries as sellers or buyers. It emerged that sellers showed greater EV sensitivity (defined as the rank correlation between the set price for each lottery and its EV) except in a condition with an extended deliberation time of 15 seconds. In study 3, the buyer–seller difference in EV sensitivity was replicated even when the pricing task was presented repeatedly, while in study 4, it was eliminated when buying and selling trials were randomly mixed. The reduction of the “seller's sense” in long deliberation and mixed trials settings supports an attentional resource‐based account of the differences between sellers and buyers in their EV sensitivity. Copyright © 2016 John Wiley & Sons, Ltd.     

财富越多，责任越大：资金数量和来源对公共物品困境中第三方惩罚的影响

本研究探讨了公共物品困境中,初始资金的数量和来源如何影响第三方对成员贡献值的评价及惩罚。行为结果发现了“贵族责任效应”,即在同等贡献值条件下,相比于获得较少初始资金的成员,第三方会更重地惩罚获得较多初始资金的成员。当初始资金是随机分配而非通过个人努力获得时,该效应更强。在神经层面上,发现初始资金的数量和来源调节了第三方评估贡献值时所诱发的FRN和P3成分。其中FRN波幅与惩罚力度显著相关。本研究揭示了初始资金数量和来源如何调节第三方对成员贡献的评估及相关惩罚决策。