For Whom is Parting with Possessions More Painful? Cultural Differences in the Endowment Effect

27 Pages Posted: 28 Sep 2020

See all articles by William Maddux

William Maddux

INSEAD - Organisational Behavior

Haiyang Yang

Johns Hopkins University - Carey Business School

Carl Falk

University of British Columbia (UBC)

Hajo Adam

affiliation not provided to SSRN

Wendi L. Adair

University of Waterloo - Department of Psychology

Yumi Endo

Kansai University

Ziv Carmon

INSEAD

Steven J. Heine

University of British Columbia (UBC)

Date Written: May 1, 2010

Abstract

The endowment effect – the tendency for owners (potential sellers) to value objects more than potential buyers – is among the most widely studied judgment and decision-making phenomena. However, the current research is the first to explore whether the effect varies across cultures. Given previously demonstrated cultural differences in self-construals and self-enhancement, we predicted a smaller endowment effect for East Asians compared to Westerners. Two studies involving buyers and sellers of a coffee mug (Study 1a) and a box of chocolates (Study 1b) supported this prediction. Study 2 conceptually replicated this cultural difference by experimentally manipulating independent and interdependent self-construals. Finally, Study 3 provided evidence for a self-enhancement mechanism: Cultural differences emerged when self-object associations were made salient, but disappeared when self-object associations were minimized. Thus, the endowment effect may be influenced by the degree to which independence and self-enhancement (vs. interdependence and self-criticism) are culturally valued or normative.

Keywords: culture, self-construal, self-enhancement, endowment effect, decision-making

Suggested Citation

Maddux, William and Yang, Haiyang and Falk, Carl and Adam, Hajo and Adair, Wendi L. and Endo, Yumi and Carmon, Ziv and Heine, Steven J., For Whom is Parting with Possessions More Painful? Cultural Differences in the Endowment Effect (May 1, 2010). INSEAD Working Paper No. 2010/76/OB/MKT, Available at SSRN: https://ssrn.com/abstract=1670617 or http://dx.doi.org/10.2139/ssrn.1670617

William Maddux (Contact Author)

INSEAD - Organisational Behavior ( email )

Finance area, Boulevard de Constance
Fontainebleau 77305
France

Haiyang Yang

Johns Hopkins University - Carey Business School ( email )

100 International Drive
Baltimore, MD 21202
United States

Carl Falk

University of British Columbia (UBC) ( email )

2329 West Mall
Vancouver, British Columbia BC V6T 1Z4
Canada

Hajo Adam

affiliation not provided to SSRN ( email )

Wendi L. Adair

University of Waterloo - Department of Psychology ( email )

200 University Avenue West
Waterloo, Ontario N2L 3G1
Canada
519-888-4567 ext. 38143 (Phone)
519-746-8631 (Fax)

Yumi Endo

Kansai University ( email )

3-3-35 Yamatecho
Suita, Osaka, 564-8680
Japan

Ziv Carmon

INSEAD ( email )

1 Ayer Rajah Ave
Singapore, 138676
Singapore

Steven J. Heine

University of British Columbia (UBC) ( email )

2329 West Mall
Vancouver, British Columbia BC V6T 1Z4
Canada

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