Abstract
We report the result of experiments designed to assess the effect of initial
endowments on willingness to pay values elicited from multi-unit Vickrey
auctions. Comparing bids from an “endow and upgrade” approach with the “full
bidding” approach, we find that the direction of the endowment effect generally
depends on the number of endowed units of the conventional product that subjects
are willing to give up in exchange for units of the upgraded product. The
endowment effect is “reverse” when the number of units that participants are
willing to give up is lower or equal to the number of remaining endowed units.
However, we generally find an endowment effect when the number of units a
participant is willing to give up is higher than the number of remaining endowed
units.
Original language | English |
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Pages (from-to) | 41 - 55 |
Number of pages | 15 |
Journal | Advances in Management Applied Economics |
Volume | 2 |
Issue number | 4 |
Publication status | First published - 2012 |
Keywords
- Endowment effect
- Multi-unit Vickery auctions