Ownership and Rent Stigma: Two Experiments

Abstract

We provide experimental evidence for the existence of “rent stigma,” a preference for owning goods or real estate to renting them. In one experiment, anonymous respondents preferred owning a car or house to renting them even though the transaction was constructed to be identical in each case in terms of economic payoffs and risk. In a second experiment, a survey of law students who were asked how much they would pay to own rather than rent a laptop found similar results. However, we found little or no evidence for our hypotheses that rent stigma would decline in conditions in which the advantages of renting were made salient. The existence of rent stigma raises concerns that the framing of a transaction in terms of purchasing rather than rent may be used to manipulate consumers.

Keywords: ownership, rent, experiment, behavioral economics

JEL Classification: K11, D03