Endowment Effects for Products with Negative vs. Positive Attributes

Abstract:     
In two experiments we study the endowment effect in the exchange of an endowment for an alternative product. The products differed either in their unique-positive or unique-negative features. Furthermore, we compared endowment effects for both hedonic and utilitarian goods. The results of the first experiment show a larger endowment effect in the unique-negative than in the unique-positive features condition, especially for utilitarian products. The results suggest that people tend to focus on the exchange product under these conditions. The second experiment shows that induced focusing on the exchange product positively influences the endowment effect, especially in the unique-negative condition for utilitarian products. We conclude that focusing has differential effects on choices regarding positive vs negative features and regarding the type of good.

Number of Pages in PDF File: 26

working papers series