The Endowment Effect: Is a Bird in the Hand Worth More than Two in the Bush?

Hüsnü Bä°lä°r

Fiscaoeconomia, 2025, issue 3

Abstract: This study examines the concept of the endowment effect and the role of cultural factors in shaping this phenomenon. The endowment effect refers to the tendency of individuals to assign a higher value to items they own compared to items they do not yet possess. Accordingly, the perceived value of a product by an individual varies depending on whether that person is a buyer or a seller. In this respect, although various concepts such as attachment to the product, loss aversion, transaction cost, income effect, and uncertainty are used in the literature to explain the subjective evaluation of a product, the most frequently employed concept in this explanation is the endowment effect. Rooted in both psychological and economic principles, this effect is explained through factors such as loss aversion, emotional attachment, status quo preference, and reference dependence. Experimental studies in the literature highlight how cultural differences influence the strength of the endowment effect. For example, it has been observed that individuals with higher market experience exhibit a weaker endowment effect, while cultural elements such as individualism and collectivism shape this tendency. The study, in this regard, suggests that the endowment effect, which is described as “cognitive bias†, is not a universal phenomenon but rather a culturally constructed concept.

Keywords: The Endowment Effect; Cognitive Bias; Rationality; Culture (search for similar items in EconPapers)
JEL-codes: Z10 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
https://dergipark.org.tr/en/download/article-file/4679054

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fis:journl:250316

DOI: 10.25295/fsecon.1655221

Access Statistics for this article

More articles in Fiscaoeconomia from Tubitak Ulakbim JournalPark (Dergipark)
Bibliographic data for series maintained by Emre Atsan ().