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.     

Role of social value orientation in the endowment effect

The purpose of the present research was to explore the role of social value orientation in the endowment effect. The study gathered 190 participants from university students in Taiwan: 74 of these were classified as individualists, 44 as competitors and 56 as prosocials, with 16 being unclassified. Results from an experimental study indicated that the individualists' and competitors' average selling prices were significantly higher than the average buying prices for a commodity; thus the endowment effect was observed in these two orientations. The endowment effect was not observed in those having a prosocial orientation, however.     

Memento Auschwitz: Growing Up in Post-War Germany

In this article, I provide some biographical data that is emblematic of the ways in which growing up in Germany shaped my sense of what it means for me to be a German. By explaining the notions of collectivity, Hour Zero, Betroffenheit, and Wiedergutmachung, I identify the leading, albeit in hindsight contradictory, notions that organized my experience under the overarching memento of my life: memento Auschwitz.     

For whom is parting with possessions more painful? Cultural differences in the endowment effect

The endowment effect--the tendency for owners (potential sellers) to value objects more than potential buyers do--is among the most widely studied judgment and decision-making phenomena. However, the current research is the first to explore whether the effect varies across cultures. Given previously demonstrated cultural differences in self-construals and self-enhancement, we predicted a smaller endowment effect for East Asians compared with Westerners. Two studies involving buyers and sellers of a coffee mug (Study 1a) and a box of chocolates (Study 1b) supported this prediction. Study 2 conceptually replicated this cultural difference by experimentally manipulating independent and interdependent self-construals. Finally, Study 3 provided evidence for an underlying self-enhancement mechanism: Cultural differences emerged when self-object associations were made salient, but disappeared when self-object associations were minimized. Thus, the endowment effect may be influenced by the degree to which independence and self-enhancement (vs. interdependence and self-criticism) are culturally valued or normative.     

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 relationship between endowment and ownership effects in memory across cultures

An object one owns is typically more highly valued than an equivalent object owned by another person. This endowment effect has been attributed to the aversion of loss of one’s possessions (through selling), or the added value of an item due to self-association (through owning). To date, investigation of these mechanisms has been hampered by the between-subjects methodology traditionally employed to measure endowment. Over two experiments, we report a novel within-subjects method for measuring an endowment bias. In these studies, Western participants showed enhanced valuation of owned items, whereas East-Asian participants did not. This endowment bias also correlated with the ownership effect in memory (a measure of self-referential processing) in Western, but not East-Asian participants. Our results suggest that the endowment effect is partly predicated on the same factors that influence the ownership effect and that this commonality is likely linked to conceptions of ownership specifically, and self-concept more generally.     

Making Decisions in Foreign Languages: Weaker Senses of Ownership Attenuate the Endowment Effect

Although the number of bilingual consumers is expanding, research on the impact of language on consumer decision making is scarce. The current research examines the endowment effect, which is a fundamental consumer decision‐making regularity, under native versus foreign language processing. I show that the endowment effect, which refers to higher valuation of a given product by sellers than buyers, is attenuated when sellers and buyers process information in a foreign language due to a decrease in sellers’ valuation of the product. I further document empirical evidence for the underlying mechanism of this finding. Thinking in a foreign language diminishes the impact of affective reactions on sellers’ judgment, which results in lowered sense of psychological ownership. This lowered sense of psychological ownership significantly decreases sellers’ valuation to a level comparable to the valuation of buyers. The implications of these results for theory and practice, and avenues for future research are discussed.     

The extensibility of the endowment effect to others is mediated by degree of intimacy

Recent studies have suggested that the endowment effect may actually be a type of self‐referent cognitive bias due to the mere ownership of an object. However, it is not adequately understood how the ownership of an object affects the endowment effect. The current research is the first to explore if the endowment effect could be extended to different ownerships. The results suggest that the endowment effect extends to goods owned by their mothers, romantic partners and close friends, but not acquaintances. Furthermore, the level of intimacy between individuals and mothers/romantic partners/close friends/acquaintances mediates the relationship between the effect of ownership and the extensibility of the endowment effect. These findings are consistent with the mere ownership effect that ownership increases valuation by enhancing the salience of the self.     

Guidance in scottish secondary schools: A client evaluation

Formal provision for pupil guidance in Scottish secondary schools has been a controversial innovation. This paper provides some ofthe first evidence of its impact based on the evaluation of its clients and using data collected as part of a major national survey of Scottish school-leavers. It indicates that guidance teachers have been having some influence on the curricular and vocational decisions of more-able leavers and also provides evidence of progress over time. It suggests, however, that in terms of distributing and focussing their efforts such teachers have yet to make much impact on the vocational problems facing less-able leavers. Progress in the area ofpersonal guidance for ail leavers has also been restricted. Some reasons underlying these developments are discussed.     

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.     

Are two narcissists better than one? The link between narcissism, perceived creativity, and creative performance

The current research examines the link between narcissism and creativity at the individual, relational, and group levels of analysis. It finds that narcissists are not necessarily more creative than others, but they think they are, and they are adept at persuading others to agree with them. In the first study, narcissism was positively associated with self-rated creativity, despite the fact that blind coders saw no difference between the creative products offered by those low and high on narcissism. In a second study, more narcissistic individuals asked to pitch creative ideas to a target person were judged by the targets as being more creative than were less narcissistic individuals, in part because narcissists were more enthusiastic. Finally, a study of group creativity finds evidence of a curvilinear effect: Having more narcissists is better for generating creative outcomes (but having too many provides diminishing returns).     

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.     

Mothers' experiences related to the disposal of children's clothing and gear: keeping Mister Clatters but tossing broken Barbie

• Drawing upon depth interviews with mothers, this study explores meanings attached to children's items disposed of through various channels. Items with little value (rubbish) such as broken toys were typically thrown away. Items that had deep personal meaning for the mothers but that lacked clear value to others (mementos) are kept in storage without plans for the future transfer of ownership to anyone else. Some mementos are extensions of the children's identities; they are often contaminated from use by the children and/or indexed to specific memories held by the mothers. Items that have less personal meaning for the mothers but that might be useful to other families (wares) were redistributed through giving, selling or donating. Baby wares were typically given to other mothers, while wares for older children were donated to charity. Interviewees described keeping some items on display or in storage with the intention of passing them on to children or grandchildren at a later time (intended heirlooms). Intended heirlooms have mythologized stories of origin, they affirm family identity, and some demonstrate properties of sacredness. Suggested directions for future research include further exploration of mothers' giving to other mothers and identity issues related to disposal.

Copyright © 2010 John Wiley & Sons, Ltd.     

A Dilemma for Calibrationism

The aim of this paper is to describe a problem for calibrationism: a view about higher order evidence according to which one's credences should be calibrated to one's expected degree of reliability. Calibrationism is attractive, in part, because it explains our intuitive judgments, and provides a strong motivation for certain theories about higher order evidence and peer disagreement. However, I will argue that calibrationism faces a dilemma: There are two versions of the view one might adopt. The first version, I argue, has the implausible consequence that, in a wide range of cases, calibrationism is the only constraint on rational belief. The second version, in addition to having some puzzling consequences, is unmotivated. At the end of the paper I sketch a possible solution.     

The enhanced Simon effect for older adults is reduced when the irrelevant location information is conveyed by an accessory stimulus

The Simon effect, better performance when irrelevant stimulus location corresponds with the response location than when it does not, typically is larger for older than younger adults. However, Simon and Pouraghabagher [Simon, R. J., & Pouraghabagher, A. R. (1978). The effect of aging on the stages of processing in a choice reaction time task. Journal of Gerontology, 33, 553-561] found no age difference using an accessory-stimulus Simon task in which the relevant dimension was the color of a visual stimulus and the irrelevant dimension the location of a tone. Experiment 1 confirmed that older adults show a larger Simon effect than younger adults for the visual Simon task and that this age-related deficit is reduced or eliminated for the auditory-accessory task. Experiment 2 provided evidence suggesting that a small part of the age-related deficit in the visual Simon task is due to having to code the location of the relevant stimulus, but Experiment 3 showed that the majority of the deficit is due to the relevant and irrelevant information being conveyed by the same stimulus. Reaction-time distribution analyses show similar functions for younger and older adults, suggesting that the time course of activation is similar for both age groups.     

Genetic Enhancement and Moral Attitudes Toward the Given

Several authors, including Michael Sandel, distinguish between two different attitudes toward nature: mastery and giftedness. Giftedness is the superior attitude, Sandel argues, because it better accords with the values of humility, responsibility, and solidarity. And giftedness, in combination with these values, provides a rational basis for opposing the employment of genetic enhancement. Against this, I argue that talents and genetic endowment are more plausibly viewed as undeserved, that not everything undeserved is a gift, and that even if talents and endowment were gifts, this would not support a prohibition against pursuing genetic enhancement.     

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.     

源于“反常”终于“常理”的禀赋效应

如果忽略收入影响和交易成本, 愿意为一样物品支付的价格应等于愿意出售的价格。而塞勒教授却发现, 现实生活中有一些“反常”现象, 个体会对自己所拥有的物品赋予更高的价值, 造成“愿意支付价格”和“愿意出售价格”的不一致。塞勒利用预期理论中的损失厌恶对这些反常现象进行解释, 并将该现象称为禀赋效应(endowment effect)。此后, 众多研究者从不同角度对该效应进行了探索和论证。文章详细梳理了禀赋效应的多种解释机制, 包括损失厌恶、心理所有权理论、偏差的认知过程以及进化的观点等, 论证了禀赋效应符合“常理”的原因, 同时也探讨了禀赋效应在商业销售策略和政府拆迁政策等方面的应用前景。     

How the adoption of impression management goals alters impression formation

Five experiments (N = 390) tested the hypothesis that adopting an impression management goal leads the impression manager to view an interaction partner as having less of the trait he or she is attempting to express. This hypothesis was confirmed for the impression management goals of appearing introverted, extraverted, smart, confident, and happy. Experiment 2 shows that adoption of the impression goal could alter judgments even when participants could not act on the goal. Experiment 3 provides evidence that adopting an impression management goal prompted a comparison mind-set and that this comparison mind-set activation mediated target judgments. Experiment 4 rules out a potential alternative explanation and provides more direct evidence that comparison of the impression manager's self-concept mediates the impression of the target. Experiment 5 eliminates a potential confound and extends the effect to another impression goal. These experiments highlight the dynamic interplay between impression management and impression formation.     

The endowment-institutional affinity effect

The endowment effect occurs when ownership of a good leads consumers to value the good more than its market value. Students who were given College of Business Administration insignia mugs to keep valued them significantly more than students who were given the same mugs to examine and return (nonendowment condition). The endowment effect also occurred for plain white mugs. Students who were given plain white mugs to keep valued them more than students who were given the same mugs to examine and return. Ownership of insignia mugs not only resulted in the endowment effect but also resulted in an institutional affinity effect: Students provided higher satisfaction ratings with the College of Business Administration than did students endowed with plain white mugs and students in nonendowed conditions. This study demonstrates the impact of the endowment effect on institutional affinity for insignia goods. However, the tandem endowment-affinity effect occurs at the attitude formation stage, not when an attitude has already been formed.