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  3. American Economic Review
  4. May 2012
  5. Salience in Experimental Tests of the Endowment Effect

American Economic Review

ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)

Salience in Experimental Tests of the Endowment Effect

  • Pedro Bordalo
  • Nicola Gennaioli
  • Andrei Shleifer
American Economic Review
vol. 102, no. 3, May 2012
(pp. 47–52)
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Abstract

We provide a novel account of experimental evidence for the endowment effect using the salience mechanism (Bordalo, Gennaioli, and Shleifer, 2011). The two-stage procedure implemented in experiments implies that the endowed good and other goods are evaluated in different contexts. We describe conditions under which the standard effect occurs, but also account for recent evidence such as a reverse endowment effect for bads and a role for reference prices in modulating the WTA-WTP gap.

Citation

Bordalo, Pedro, Nicola Gennaioli, and Andrei Shleifer. 2012. "Salience in Experimental Tests of the Endowment Effect." American Economic Review, 102 (3): 47–52. DOI: 10.1257/aer.102.3.47

JEL Classification

  • D63 Equity, Justice, Inequality, and Other Normative Criteria and Measurement
  • D11 Consumer Economics: Theory
  • D81 Criteria for Decision-Making under Risk and Uncertainty