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The Effect of Initial Endowments in Experimental Auctions

Jay Corrigan () and Matthew Rousu ()

Working Papers from Kenyon College, Department of Economics

Abstract: We report the results of an experiment designed to test whether initial endowments affect value estimates elicited from experimental auctions. Comparing bids for one unit of a good, two units of a good, and a second unit of a good when endowed with the first unit, we find that willingness to pay for the second unit of a good is, on average, as much as 75% higher when endowed with the first unit. We go on to advance two theories that could potentially reconcile our results with neoclassical consumer theory.

Keywords: Endowment Effect; Experimental Auctions; Reciprocity; Top-Dog Effect (search for similar items in EconPapers)
JEL-codes: C91 D12 D44 (search for similar items in EconPapers)
Date: 2006-05
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http://economics.kenyon.edu/corrigan/publications/Initial%20Endowments.pdf (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:ken:wpaper:0601

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