The Effect of Initial Endowments in Experimental Auctions

Posted: 8 May 2006

See all articles by Jay R. Corrigan

Jay R. Corrigan

Kenyon College - Department of Economics

Matthew C Rousu

Susquehanna University - Economics

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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.

Suggested Citation

Corrigan, Jay R. and Rousu, Matthew C, The Effect of Initial Endowments in Experimental Auctions. American Journal of Agricultural Economics, Vol. 88, No. 2, pp. 448-457, May 2006, Available at SSRN: https://ssrn.com/abstract=896344 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 - Economics ( email )

Selinsgrove, PA 17870
United States
570 372-4186 (Phone)

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