The Effect of Initial Endowments in Experimental Auctions

10 Pages Posted: 22 Apr 2020

See all articles by Jay R. Corrigan

Jay R. Corrigan

Kenyon College - Department of Economics

Matthew C. Rousu

Susquehanna University

Multiple version iconThere are 2 versions of this paper

Date Written: May 2006

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

Suggested Citation

Corrigan, Jay R. and Rousu, Matthew C., The Effect of Initial Endowments in Experimental Auctions (May 2006). American Journal of Agricultural Economics, Vol. 88, Issue 2, pp. 448-457, 2006, Available at SSRN: https://ssrn.com/abstract=3581970 or http://dx.doi.org/10.1111/j.1467-8276.2006.00870.x

Jay R. Corrigan (Contact Author)

Kenyon College - Department of Economics ( email )

Gambier, OH 43022
United States
740-427-5281 (Phone)
740-427-5276 (Fax)

Matthew C. Rousu

Susquehanna University

Selinsgrove, PA 17870
United States

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