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Exchange asymmetries for bads? Experimental evidence

Markus Dertwinkel-Kalt () and Katrin Köhler

No 161, DICE Discussion Papers from Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE)

Abstract: Whereas exchange asymmetries for goods are well known, we provide a first incentivized test of exchange asymmetries for bads (i.e., items yielding a negative utility). On the one hand, prospect theory predicts an endowment effect for goods and bads, on the other hand, attention-based theories such as salience theory predict an endowment effect for goods, but a reverse endowment effect (i.e., a particular high willingness to switch) for bads. Since both strands of research often make the same predictions concerning biased decision making, the investigation of exchange asymmetries for bads is a key element to distinguish between their validity. In our experiment, we find a strong endowment effect for bads, so that our results speak in favor of prospect theory.

Keywords: Loss Aversion; Salience Theory; Prospect Theory; Endowment Effect (search for similar items in EconPapers)
JEL-codes: D03 (search for similar items in EconPapers)
Date: 2014
New Economics Papers: this item is included in nep-cbe, nep-exp and nep-upt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Journal Article: Exchange asymmetries for bads? Experimental evidence (2016) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:dicedp:161

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