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Mementos and the endowment effect |
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| Authors: | Charlene K Chu Suzanne B Shu |
| Institution: | 1. Argyros School of Business and Economics, Chapman University, Orange, California, USA;2. The Charles H. Dyson School of Applied Economics and Management, SC Johnson College of Business, College of Agriculture and Life Sciences, Cornell University, Ithaca, New York, USA |
| Abstract: | 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. |
| Keywords: | disposition endowment effect loss aversion memento psychological ownership |