Aspects of Endowment: A Query Theory of Value Construction

Journal of Experimental Psychology: Learning, Memory, and Cognition, Vol. 33, No. 3, pp. 461-474

14 Pages Posted: 7 Jan 2009  

Eric J. Johnson

Columbia Business School - Marketing

Gerald Häubl

University of Alberta - Department of Marketing, Business Economics & Law

Anat Keinan

Harvard Business School

Date Written: May 2007

Abstract

How do people judge the monetary value of objects? One clue is provided by the typical endowment study (D. Kahneman, J. L. Knetsch, & R. H. Thaler, 1991), in which participants are randomly given either a good, such as a coffee mug, that they may later sell ("sellers") or a choice between the good and amounts of cash ("choosers"). Sellers typically demand at least twice as much as choosers, inconsistent with economic theory. This result is usually explained by an increased weighting of losses, or loss aversion. The authors provide a memory-based account of endowment, suggesting that people construct values by posing a series of queries whose order differs for sellers and choosers. Because of output interference, these queries retrieve different aspects of the object and the medium of exchange, producing different valuations. The authors show that the content and structure of the recalled aspects differ for selling and choosing and that these aspects predict valuations. Merely altering the order in which queries are posed can eliminate the endowment effect, and changing the order of queries can produce endowment-like effects without ownership.

Keywords: decision making, preference construction, loss aversion, endowment effect

Suggested Citation

Johnson, Eric J. and Häubl, Gerald and Keinan, Anat, Aspects of Endowment: A Query Theory of Value Construction (May 2007). Journal of Experimental Psychology: Learning, Memory, and Cognition, Vol. 33, No. 3, pp. 461-474. Available at SSRN: https://ssrn.com/abstract=1323478

Eric J. Johnson (Contact Author)

Columbia Business School - Marketing ( email )

New York, NY 10027
United States

Gerald Häubl

University of Alberta - Department of Marketing, Business Economics & Law ( email )

Edmonton, Alberta T6G 2R6
Canada

Anat Keinan

Harvard Business School ( email )

Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States

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